Delta auditors doubt future of airline

[rgd]

www.dfw.com/mld/dfw/business/9677804.htm?1c

 

[328dude]

Don't post crap that you have to suscribe too.

 

[PilotAg]

Here you go:



Delta auditors doubt future of the airline

Staff and Wire Reports

Delta Air Lines faced grim news on two fronts Wednesday, as the airline's auditors expressed doubts about the company's future while its chief executive backed away from previous hopes that a crucial agreement with pilots might be worked out this week.

Atlanta-based Delta, which announced Sept. 8 that it will close its hub at Dallas/Fort Airport amid a restructuring, filed papers with the Securities and Exchange Commission late Wednesday that included a so-called "going concern" letter from its auditor, Deloitte & Touche.

In the letter, the auditors pointed out that Delta "has suffered recurring losses, faces labor and liquidity issues and may need to seek protection under Chapter 11." The company's future is in doubt, the letter stated.

Such warnings are common for companies in dire financial straits.

But it underscored the urgency of Delta's need to cut costs amid intense competition and high prices for jet fuel.

Delta has about 4,700 employees in North Texas, including those who work for regional affiliate Atlantic Southeast Airlines.

Under its restructuring, about 3,600 of those jobs will be eliminated or transferred to other cities.

Delta has asked pilots for $1 billion in concessions and also wants to stem a flood of early retirements by pilots that has cost the company millions in lump-sum pension payments.

Delta pilots who retire can elect to receive 50 percent of their pension benefit in a lump sum and the other 50 percent later as an annuity, regulatory filings show.

The exodus of pilots could also cause cancellations and delays this fall, airline executives had warned.

Gerald Grinstein, Delta's chief executive, had recently said he hoped that an agreement on early retirements would be reached by the end of this week.

But at a speech in Atlanta on Wednesday, he said he doubted that a deal was imminent.

"We're in the middle of a discussion, and I think they're going to be responsive, but it's now Wednesday, and the pilots are scattered, and it has to be reviewed by a lot of people inside the organization, and you've got a weather condition coming into this airport, so all of those things tell me that it will be delayed probably beyond this week," he said.

Grinstein then immediately left the building and did not take further questions from reporters.

Grinstein has said previously that the nation's third-largest airline would be forced to file for bankruptcy if it didn't get its pilot retirement issue under control by the end of September.

Star-Telegram Staff Writer Trebor Banstetter Contributed to This Report, Which Includes Material From the Associated Press.

Delta: Dal, $4.10, Up $0.01

 

[rgd]

Thanks PilotAg. I couldn't get it to copy. I didn't have to subscribe to it to read it either, so I posted the link. 328, **CENSORED****CENSORED****CENSORED****CENSORED** off

 

[General Lee]

The creditors said they wanted to see it "all laid out" before they would consider offering help to Delta, so this was expected. Deloitte and Touche did the audit and said that if things DON'T change, then we would have to go Chap 11. That is obvious. If the pay scales don't change, if the lease payments don't change, and if fuel stays high---that wouldn't be sustainable with our current debt. All of this was expected. Now the plan is to get concessions from us (the pilots), take concessions from every other non-union employee, and ask for concessions from the creditors, lendors, and vendors. You might have seen Fitch and their bond ratings going down today for us---that also is expected since we are offering less than the full worth of bonds----like offering them 30 cents on the dollar. Fitch and the S&P don't like that---and hence lowered our credit ratings again because the bond holders won't be getting what they originally wanted....



Bye Bye--General Lee