jettypeguy
Well-known member
- Joined
- Feb 12, 2003
- Posts
- 98
I don't know if this means the credit card companies will withhold monies til pax take the flight like at ATA who has a similar credit rating?
NEW YORK (Standard & Poor's) July 19, 2004--Standard & Poor's Ratings
Services lowered its ratings on Delta Air Lines Inc., including lowering
the corporate credit rating to 'CCC+' from 'B-'. The long-term rating
outlook is negative. However, selected ratings on enhanced equipment trust
certificates were affirmed, reflecting differing prospects for continued
payment and collateral protection for specific issues.
"The downgrade reflects an increasing risk of bankruptcy or an
out-of-court restructuring of debt as Delta seeks to lower its costs and
maintain adequate liquidity," said Standard & Poor's credit analyst Philip
Baggaley. "The company's statements that 'all…stakeholders must
participate' and that cost savings must be combined with 'reduced debt'
imply that it may seek to renegotiate some debt obligations as part of a
comprehensive turnaround plan," the credit analyst continued.
Restructuring of bond payments or a coercive exchange would be considered a default and cause the company's corporate credit rating to be lowered to
'D' (default) or 'SD' (selective default).
Delta reported today a second-quarter net loss of $1.96 billion,
including previously disclosed charges of $1.65 billion relating to the
write-off of deferred tax assets and to the airline's pilot pension plan.
Even excluding special items, the loss was worse than the comparable
figure, also excluding special items, for the same period in 2003 (which
was affected by the immediate aftermath of the Iraq war), due to a huge
increase in fuel prices and a further deterioration in passenger yields.
The company expects continued erosion of yields through the remainder of
the year, and "no revenue recovery in the foreseeable future."
Unrestricted cash of $2.0 billion at June 30, 2004 was slightly less than
$2.2 billion at the end of the first quarter.
Ratings on Delta, the third-largest U.S. airline, reflect financial
damage from heavy losses over the past several years; a high operating
cost structure; substantial debt, lease, and postretirement liabilities;
and ongoing risks associated with the company's participation in the
cyclical and price-competitive airline industry. Positive factors are the
company's solid market position in the U.S. domestic and trans-Atlantic
markets and the work rule flexibility and productivity made possible by a
mostly nonunion work force. The company states that its original
cost-cutting goals have been superseded by the combined financial damage
of eroding yields and high fuel prices, necessitating more drastic changes.
Ratings could be lowered if Delta does not make rapid progress toward
significant cost reductions in its negotiations with pilots, or if there
are further indications that restructuring of debt obligations will be
part of the airline's recovery plan. In addition, material deterioration
in Delta's already weak financial profile could trigger a downgrade.
NEW YORK (Standard & Poor's) July 19, 2004--Standard & Poor's Ratings
Services lowered its ratings on Delta Air Lines Inc., including lowering
the corporate credit rating to 'CCC+' from 'B-'. The long-term rating
outlook is negative. However, selected ratings on enhanced equipment trust
certificates were affirmed, reflecting differing prospects for continued
payment and collateral protection for specific issues.
"The downgrade reflects an increasing risk of bankruptcy or an
out-of-court restructuring of debt as Delta seeks to lower its costs and
maintain adequate liquidity," said Standard & Poor's credit analyst Philip
Baggaley. "The company's statements that 'all…stakeholders must
participate' and that cost savings must be combined with 'reduced debt'
imply that it may seek to renegotiate some debt obligations as part of a
comprehensive turnaround plan," the credit analyst continued.
Restructuring of bond payments or a coercive exchange would be considered a default and cause the company's corporate credit rating to be lowered to
'D' (default) or 'SD' (selective default).
Delta reported today a second-quarter net loss of $1.96 billion,
including previously disclosed charges of $1.65 billion relating to the
write-off of deferred tax assets and to the airline's pilot pension plan.
Even excluding special items, the loss was worse than the comparable
figure, also excluding special items, for the same period in 2003 (which
was affected by the immediate aftermath of the Iraq war), due to a huge
increase in fuel prices and a further deterioration in passenger yields.
The company expects continued erosion of yields through the remainder of
the year, and "no revenue recovery in the foreseeable future."
Unrestricted cash of $2.0 billion at June 30, 2004 was slightly less than
$2.2 billion at the end of the first quarter.
Ratings on Delta, the third-largest U.S. airline, reflect financial
damage from heavy losses over the past several years; a high operating
cost structure; substantial debt, lease, and postretirement liabilities;
and ongoing risks associated with the company's participation in the
cyclical and price-competitive airline industry. Positive factors are the
company's solid market position in the U.S. domestic and trans-Atlantic
markets and the work rule flexibility and productivity made possible by a
mostly nonunion work force. The company states that its original
cost-cutting goals have been superseded by the combined financial damage
of eroding yields and high fuel prices, necessitating more drastic changes.
Ratings could be lowered if Delta does not make rapid progress toward
significant cost reductions in its negotiations with pilots, or if there
are further indications that restructuring of debt obligations will be
part of the airline's recovery plan. In addition, material deterioration
in Delta's already weak financial profile could trigger a downgrade.
