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Delta Bankruptcy Here it Comes

701EV

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NEW YORK (Reuters) - Delta Air Lines (NYSE:DAL - News) has begun arranging the financing it would need should it seek bankruptcy protection, The New York Times reported on Saturday.


Citing "people with direct knowledge of Delta's actions," the Times reported that Wall Street analysts, industry executives and finance experts said the troubled airline could seek the protection within weeks.

The Atlanta-based airline is holding the discussions with lenders including GE Commercial Finance, which provided restructuring money in 2004, the Times said, citing both airline employees and members of the financial community. It said GE Commercial declined to comment.

The No. 3 domestic airline is also exploring selling or refinancing its commuter lines, Comair and Atlantic Southeast Airlines, and is seeking more savings from employees, according to the report.

The Times also said that Delta officials had acknowledged that it needed to be financially prepared for a filing, which legal experts expected would occur in New York, although a final decision was not imminent.

Delta, like the rest of the industry, has been battered by skyrocketing oil prices.

On Aug. 29 the airline's credit card processing agreement, which covers critical MasterCard and Visa transactions, will expire. Delta said on Tuesday it was trying to lower the amount of money it needs to pay up front to secure a new credit card processor. People close to the talks say Delta is being asked to set aside $300 million to $800 million, but the airline did not comment on the figures, the Times said.


Get ready here it comes!

701EV
 

General Lee

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Yup, it probably is needed. It won't be fun at all. Nope. But, things that have needed to be done a while ago will be done. Getting rid of some debt, selling non essential assets, and getting reasonable lease rates (heck, United got most of theirs) will help. Sure, there will be some pay cuts also, but it will be across the board (except for management of course). (and we only have one union---all the rest will take it without a fight) Labor has given over $2 billion in pay cuts as concessions, and so far the creditors have given $100 million. They will now have to share in more of the pain. Also, we actually have a plan to transform, but we were late implementing it. Overall, it may need to happen.


Bye Bye--General Lee
 

VABB

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General Lee said:
Yup, it probably is needed. It won't be fun at all. Nope. But, things that have needed to be done a while ago will be done. Getting rid of some debt, selling non essential assets, and getting reasonable lease rates (heck, United got most of theirs) will help. Sure, there will be some pay cuts also, but it will be across the board (except for management of course). (and we only have one union---all the rest will take it without a fight) Labor has given over $2 billion in pay cuts as concessions, and so far the creditors have given $100 million. They will now have to share in more of the pain. Also, we actually have a plan to transform, but we were late implementing it. Overall, it may need to happen.


Bye Bye--General Lee

Don't forget the garage sale with ASA and Comair up for grabs. Probably cheap too.
 

AlbieF15

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...I wouldn't wish this on anyone. I remember hearing about how Delta used to pay cash for its aircraft. Hang tough guys...hope things turn around soon.
 

SammyG

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VABB said:
Don't forget the garage sale with ASA and Comair up for grabs. Probably cheap too.

Ooooh...I don't want the whole airline...but if I could get a sweet deal on just one CRJ :D .....
 

Tomct

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:rolleyes:Vabb...You are truely a ClassLESS Act!
A true P3ckerhe@d!
 

IHaveAPension

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AlbieF15 said:
...I wouldn't wish this on anyone. I remember hearing about how Delta used to pay cash for its aircraft. Hang tough guys...hope things turn around soon.


You must of meant UPS, the DO pay for CASH for EVERYTHING! Oh, the do lease some aircraft, but they OWN the leasing company!
 

Dizel8

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Huh?
"all the rest will take it without a fight"

Yes, they certainly will not be upset at all:)
 

~~~^~~~

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Who knows, perhaps this week will bring news of an equity player and a life boat to maintain the Delta network until the low cost carriers lose their fuel hedges.
 
Last edited:

vc10

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~~~^~~~ said:
Who knows, perhaps this week will bring news of an equity player and a life boat to maintain the Delta network until the low cost carriers lose their fuel hedges.

Not without further employee givebacks. Chances are, if there's any uncertainty DAL will want to use the old bankruptcy law (to which access is removed on Oct 17) rather than the new.

Any deal with new financiers will be contigent on further wage givebacks. DAL pilots are still paid a lot more than those of, say, United. So givebacks need to be in place by Oct 17. So far DAL hasn't even broached the topic, at least publicly.

The General is right --- there's a lot that DAL could sweep away in Ch 11 that it won't be able to do outside of there. DAL's fleet could get significantly smaller in Ch 11. The RJ50 fleet in particular is likely to get a lot smaller.

But Ch 11 isn't anything to welcome. Both American and UAL had their crises at about the same time. AA decided to do it outside of Ch 11. UAL decided to do it inside. Which has done better since? No question, American, despite not having the tools of Ch 11.

Of course, you could also just argue that United's management is a lot worse than Americans. That would also be true. Unfortunately, DAL's management is not in the same class of that of American.
 

michael707767

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vc10 said:
The General is right --- there's a lot that DAL could sweep away in Ch 11 that it won't be able to do outside of there. DAL's fleet could get significantly smaller in Ch 11. The RJ50 fleet in particular is likely to get a lot smaller.
.

I don't think the fleet will get significantly smaller. I do think you will see an acceleration of the retirements of the 737-200s, 300s and 767-200s, but they were going to be gone soon anyway. What I do think you will see is the leasing companies finally lowering the lease rates. Delta has been paying way above market rates on most of the leased aircraft.
 
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