Chapter 11 On Thursday?

[Fly]

Reuters
Delta may file Chapter 11 this week: WSJ
Monday September 12, 4:57 am ET


NEW YORK (Reuters) - Delta Air Lines (NYSEAL - News) is expected to file for bankruptcy-court protection as early as this week and is nearing agreement on $1.7 billion in financing to keep the carrier flying while it seeks to restructure, the Wall Street Journal reported on Monday.

Citing people familiar with the situation, the newspaper said the filing was expected to be made in U.S. Bankruptcy Court in New York, but would not occur until Delta directors hold a final vote to authorize Chapter 11.

The board also must approve debtor-in-possession financing, which is expected to come from creditors led by General Electric Co.'s (NYSE:GE - News) commercial finance unit, the sources told the Journal.

A Delta spokesman declined to comment and a GE spokesman was unavailable, the newspaper said.



Delta, the No. 3 U.S. airline, which has struggled to avoid bankruptcy court for several months, has suffered from high oil prices and steep competition from low-cost carriers.

The Wall Street Journal report said Delta and its creditors are still discussing fees and other details that could delay the bankruptcy filing -- although not significantly -- according to the people with knowledge of the discussions.

Terms of the proposed pact call for Delta to get about $650 million in new financing, with the remaining $1 billion or so going to pay off a loan from GE last November that helped the Atlanta-based airline avert a bankruptcy filing then, the report said.

The Journal quoted the people familiar with the matter as saying it would likely take until Thursday at least to complete the debtor-in-possession financing and other details and convene the board for a vote.

To obtain the financing, Delta will have to essentially hock every unencumbered asset, including aircraft, spare parts, its Comair regional feeder unit and AirElite private-jet operation, gates at New York City's LaGuardia Airport and even its routes to Tokyo and London, according to documents reviewed by the Journal. The assets have an estimated value of about $3 billion.


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[Flufdriver]

Can"t wait to see how "Worldtraveler" puts spin on this new release. I suppose it will be something like..."Well it's the companies benefit to file on a Thursday of the week for the following reasons...blah...blah...blah...if DAL filed on any other day other then a Thurday it would have caused much more damage to the corporation and for all parties. I see DAL exiting BK, IF they file probably in two to three WEEKS as a much more industry leading airline..yes, I did say two to three WEEKS, not months or years........weeks, after all it is Delta!
WT

Just my thought on how it will be SPUN!! Standing by....

 

[whatkindoffreshhell]

Leo Mullin and his henchmen (Grinstein) put DL in this spot by swamping the balance sheet with debt while simultaneously proclaiming to the public how healthy DL was in the post-911 world.

$20bil in debt -- was there ever any question that DL would file? I don't even think the automakers have this much debt.

Watch DL's lawyers position this BK as a direct result of Katrina, thus entitling DL to federal aid.

 

[michael707767]

Leo Mullin and his henchmen (Grinstein) put DL in this spot by swamping the balance sheet with debt while simultaneously proclaiming to the public how healthy DL was in the post-911 world.

good point. It's not so much that Leo took on debt, but that he lied about the state of the company the whole time he was doing it. Needed time to line his pockets I guess.

 

[robbedagain]

as a former US Airways ramp agent, I truly hope that you folks do not get the hell beatings that we at US Airways took. And furthermore I truly hope that you all dont lose your pensions. We suffered through a living hell and I will be glad to tell you that I dont miss working at USAir but I do miss my fellow coworkers. I truly wish you all at DAL the very best of luck and Hope that all goes well!

 

[DLFlyer31]

good point. It's not so much that Leo took on debt, but that he lied about the state of the company the whole time he was doing it. Needed time to line his pockets I guess.

[post="299375"][/post]​

I don't think he lied about the state of the company. DL was in a good position post 9/11.

Where Leo went wrong was his belief that he could just ride out the storm by borrowing. That strategy obviously failed.

Of course, this plan was tacitly signed off on by DALPA as well. As long as they could keep their industry leading pay, they were more than happy to let DL borrow itself into oblvion. DALPA would never have helped the company until it was drained of its reserves.

 

[Beer Guzzler]

It appears so.. The stock sell off has begun.. As of 1106 AM/EST stock is trading @ .86 w/ a volume of 13.1 Million..

 

[WorldTraveler]

One thing is certain, Fly. A Delta bankruptcy will come as a surprise to no one. And it won't be the last among the legacy carriers. $2+ jet fuel is not sustainable for any US airline.

Delta's imminent filing means that over half of the capacity in the US airline industry is operating in bankruptcy. I am certain that no other industry has even seen such a massive reorganization.

Delta's mistake was not recognizing the severity of the situation and acting fast enough. While it is possible that Delta could have postponed this week, the east coast operating environment has been heading for a shakeout for decades and $2+ jet fuel only brought it about. Assuming Delta files this week, there is not a single airline that has had a hub operation on the east coast since deregulation that has not been in bankruptcy or is currently there.

United and USAirways have demonstrated that it is more likely than not to emerge from bankruptcy much stronger than they were in the years prior to a bankruptcy filing. Bankruptcy is no longer the death sentence it used to be. Delta will undoubtedly improve on UAL and USAirways' playbooks. I too hope that DL will fix the underlying problems in legacy carrier business plans rather than simply slash their way through bankruptcy hitting employee salaries and benefits.

A successful restructuring by Delta, United, and USAirways will make those who manage to stay out wish they were in. United is correcting its revenue problem while both UA and US have significantly reduced costs - although it has been painful for everyone involved. Delta already has the lowest costs in the legacy segment of the industry and they are certain to come down further. At the same time, Delta is significantly redeploying its assets in a move that is bound to improve its revenue.

The east coast has been a brutal place for airlines for decades. Assuming Delta files for bankruptcy protection this week, not a single airline that has operated a hub on the east coast since deregulation will have managed to stay out of bankruptcy - and many have simply perished.

 

[ohcaptainron]

I would like to wish all of my friends at DAL all the best, Anyone at AIRTRAN should be very worried.

 

[mistified]

The east coast has been a brutal place for airlines for decades. Assuming Delta files for bankruptcy protection this week, not a single airline that has operated a hub on the east coast since deregulation will have managed to stay out of bankruptcy - and many have simply perished.

[post="299709"][/post]​

WRONG!

 

[StraaightTaalk]

United and USAirways have demonstrated that it is more likely than not to emerge from bankruptcy much stronger than they were in the years prior to a bankruptcy filing. Bankruptcy is no longer the death sentence it used to be. Delta will undoubtedly improve on UAL and USAirways' playbooks. I too hope that DL will fix the underlying problems in legacy carrier business plans rather than simply slash their way through bankruptcy hitting employee salaries and benefits.

A successful restructuring by Delta, United, and USAirways will make those who manage to stay out wish they were in. United is correcting its revenue problem while both UA and US have significantly reduced costs - although it has been painful for everyone involved. Delta already has the lowest costs in the legacy segment of the industry and they are certain to come down further. At the same time, Delta is significantly redeploying its assets in a move that is bound to improve its revenue.

[

[post="299709"][/post]​

Ok...now he says BK is THE place to be!

Does it ever end with the Delta board's resident spin doctor?

 

[jimntx]

Assuming Delta files this week, there is not a single airline that has had a hub operation on the east coast since deregulation that has not been in bankruptcy or is currently there.

The east coast has been a brutal place for airlines for decades. Assuming Delta files for bankruptcy protection this week, not a single airline that has operated a hub on the east coast since deregulation will have managed to stay out of bankruptcy - and many have simply perished.

This news is going to be such a relief to AMR Corporation. All this time they have been booking hub expenses for MIA/IMA and LGA/JFK (and BOS in actuality; though the "hub connections" there are more AA to AE). Now they can go back, clean up the books, and restate earnings for all those years they thought they were operating hubs in those cities.

 

[firstamendment]

If this is true, good luck to all the DAL employees. Been there, done that...TWICE.

 

[WorldTraveler]

jimntx,
perhaps you're a bit young and don't recall but AA did not operate a hub at MIA when the industry was deregulated in 1978. MIA was acquired from Eastern more than a decade into deregulation.

I don't think JFK or BOS can be considered hubs in the sense that ORD or DFW (or even AA's triple failed attempts at hub buildilng in RDU, BNA, and SJC) are and you know it. AA's percentage of local traffic in BOS, JFK, and LGA are all well above 70%. With that level of percentage of local traffic, those cities cannot be considered connecting hubs.

If AA wants to restate its books, they might want to start by recalculating the expenses they paid for facilities at JFK and MIA. Passenger handling expenses for AA at JFK and MIA will easily top $20 per person. Would you like to tell me how AA is going to make money when 20% of a ticket for JFKSJU goes to pay for the facility? I can tell you assuredly that AA will never make money at those fares from a facility like that and B6 knows it. You don't even want to read Jetwire the day that B6 pulls into MIA. If you want a reason for AMR to file bankruptcy, your two multibillion dollar terminals on the east coast are about as good as it gets. Delta doesn't have any multibillion dollar terminals in any city. Oh, and last time I was in Chicago, I saw that AA still leases gates from Delta...and in DFW they are spread out over several square miles and can't afford a terminal that would be much more efficient because all of the money is going to fund expansions at MIA and JFK. Meanwhile, Delta carries far more traffic through ATL than AA does through DFW but does it in a facility that is 20 years old (largely paid for as evidenced by facilities expenses that are less than $4 per passenger) but is still copied by airport planners around the world. And am I right that AA flights use the Delta federal inspection facility at LAX?

 

[jimntx]

As I turned 60 Easter Sunday thanks for the assumption that I am too young to remember 1978. However, you did not say any airline that had a hub at or before deregulation. You said, "no airline that has operated an east coast hub since deregulation has managed to stay out of bankruptcy." Technically, as stated, you would have to bankrupt Southwest, Airtran, JetBlue, and Independence (though that one might happen soon) as well as AA to make your statement true--because they have all operated an east coast hub since deregulation.

And, using the "AA bought MIA from Eastern" argument is splitting hairs just a little too thin, don't you?