Delta Investors Move To Block Restructuring

[Hatu]

NEW YORK, Aug 26 (Reuters) - A group of investors who collectively own more than $1.4 billion of Delta Air Lines Inc. debt (NYSE😀AL - News) moved on Thursday to impede the troubled airline's attempt to restructure its lending agreements, faulting Delta's "refusal" to provide necessary information.
In a strongly worded statement, the committee said that Delta has refused to engage them "in any meaningful dialogue" with the committee's requests for more information.

"In light of Delta's refusal to provide ... due diligence regarding the restructuring, the committee has advised Delta that it is unable to support the consent solicitations at this time," the group said.

"The committee is troubled by Delta's response to the committee's requests for information and dialogue, and finds it inconsistent with Delta's stated goal of seeking expedited solutions to its financial problems," the investors added.

http://biz.yahoo.com/rf/040826/airlines_delta_debt_1.html

 

[WorldTraveler]

I really am surprised at how "ballsy" DL is being in refusing to provide information to these debt holders. However, the company does have the upper hand in that they can go to chapter 11 which could be far worse than removing the restrictions. Without knowing what DL plans to do, the debt holders are legitimately going to ask for more details. It is interesting that the average debt held by this group is less than $10 million per plane which indicates the aircraft are not very new. The solicitation announcement is for debt originated in the late 80’s to mid-90’s which indicates it is probably for MD-80s, 757s, 767-300ERs, and MD-11s – all fleet types that are not needed or could be replaced with used aircraft available on the market. It seems that in the worst case, DL could selectively default on some of this debt. They are not likely to try to repossess it given this is a very significant amount of aircraft to place.

This is very high stakes poker and I’m not sure I’d want to be calling the shots. Delta says it has retained some high powered restructuring counsel so I doubt if anyone in Atlanta is making this call on their own.

 

[Fly]

I really am surprised at how "ballsy" DL is being in refusing to provide information to these debt holders.

[post="173311"][/post]​

Refusing? More like, they don't have a plan except Ch 11. See you in court.

 

[robbedagain]

is sounds like you guys are going thru a similar thing that we at usair went thru once before and may end up in it again good luck to all of you delta folks! my dad had done 32 yrs at dal ending it at my city as a station manager

 

[WorldTraveler]

Refusing? More like, they don't have a plan except Ch 11. See you in court.

[post="173316"][/post]​

Actually, UAL gave their debt holders about one week to give them consent to renegotiate debt. The debt holders refused, UAL filed for bankruptcy, and the debt holders have been taken to the cleaners since – and Delta is certain to remind anyone who doesn’t work with them.

It is equally ballsy to assume that Delta doesn’t have a plan. Neither you and I know precisely what DL is doing but there have been enough statements that DL is not pursuing chapter 11 to believe there is another plan. Given that they are trying to renegotiate debt outside of bankruptcy, they are sure to have some plan. And United has certainly had a plan too. Theirs just happens to involve an expectation for the government to fix its problems, a strategy that has clearly failed and one which Delta is not pursuing.

I have a feeling that the airline industry will look very different in just a couple months but I’m still betting DL will not be among the ranks of the bankrupt airlines. Now wouldn't that be quite an accomplishment, Ms.Fly. Oh, and I won't be in court even if Delta is.

 

[Fly]

Too little, too late. The exodus of pilots shows what they think too.

 

[LiveInAHotel]

Mismanagement will always get you in deep with the investors! 🙄



Fly...

I agree with you on your above post 100%!

 

[WorldTraveler]

Now girls,
The moderators have said they want to usher in a kinder, gentler, and undoubtedly more optimistic world so I'll do my part to make that happen by bringing more light than heat to the boards (all of them).

DL pilots are doing what any rational person would do that is facing uncertainty - leaving if the payoff offsets the risk. Given that DL was forced to rehire 1000 pilots under the terms of the arbitration hearing, an exodus of several hundred pilots might not be such a bad thing since an aweful lot of pilots will get moved up about the time that they are being asked to take serious pay cuts.

Despite the emotion that often emanates from this board, airlines, as with all businesses are run by very rational people who really do consider the facts as best as they are known. Labor acts in the same fashion. Problem is that most people work from their perspective and take enormous gambles on the unknown, facts which no one will ever know about anything in life.

Delta is obviously playing very high stakes poker in believing that they can expect all stakeholders to work with them to restructure their business model - not because they necessarily have the best model but because they know of the trail of carnage behind them at other airlines. No stakeholder in their right mind would refuse to work with Delta because the losses that will be incurred under bankruptcy are far worse than what will be incurred in an out-of-court restructuring. I happen to believe Delta is playing tough but prudent poker. And I happen to believe that they will win. Given that Delta is receiving high caliber counsel, I doubt very seriously that DL will go too far off base.

Finally, as much as you want to predict bankruptcy, Delta is not there. Airline history shows that airlines that have gone into bankruptcy have a very poor chance of getting out and surviving. My pessimism re: United is based largely on those statistics and my optimism for DL is driven by their ability to stay out of bankruptcy. Should they cross over the line, I will change my tune. AA's accomplishment is that they made significant steps without crossing over the bankruptcy line so DL clearly has a good example to follow and improve upon.

By the way, Fly, how are UA employees responding to UA's profit announcement yesterday? UA is in a difficult position in needing to report profits to show that they are making progress in their restructuring but will be damned by employees who will see the progress and say that UA should be able to make it without the draconian measures. In reality, apart from fuel, UA probably would be showing decent profits. As I have said, however, UAL's problems are not on the operating statement but on the balance sheet. It is the balance sheet that makes getting out of bankruptcy so difficult.


Have a wonderful evening, ladies.