Grinstein's Fears Coming True As Delta Downgraded
Greg Levine, 08.09.05, 4:03 PM ET
The "economy" as an abstract notion seems to be strengthening. But don't tell that to Gerald Grinstein. The chief executive of Delta Air Lines (nyse: DAL - news - people ) has of late vowed to do all he could to stave off bankruptcy at the carrier--but warned that a Chapter 11 filing may be inexorable.
On Tuesday, the No. 3 U.S. airline got another nail pounded into it, and its stock showed the damage. According to The Associated Press, a Merrill Lynch analyst lowered the Atlanta-based firm's rating from neutral to sell. He augured that the historic jump in oil prices would wipe out cost savings from Grinstein's radical restructuring program. The AP quoted a JPMorgan analyst as declaring it "all but assured" that Delta would file for Chapter 11 if it doesn't get a cash infusion in the near term--and oil prices may tighten lenders' pocketbooks.
Delta shares sank 27 cents, or 12.11%, trading at $1.96 late Tuesday afternoon on the New York Stock exchange.
Meanwhile, another troubled legacy had better news Tuesday. A U.S. bankruptcy judge permitted US Airways (otc: UAIRQ - news - people ) to forward its restructuring plan to creditors for a vote. The judge's OK constitutes a key step in lifting the carrier out of its second bankruptcy. CEO Bruce Lakefield said Tuesday's hearing was a "another good step" in US Airways' path to reorganization. He said the firm hopes to formally emerge from bankruptcy in late September or early October. And what timing: It was revealed Tuesday that investors of America West Holdings (nyse: AWA - news - people ), the parent of America West Airlines, will vote on Sept. 13 on whether to OK the firm's merger with US Airways. Things will heat up in autumn.
Greg Levine, 08.09.05, 4:03 PM ET
The "economy" as an abstract notion seems to be strengthening. But don't tell that to Gerald Grinstein. The chief executive of Delta Air Lines (nyse: DAL - news - people ) has of late vowed to do all he could to stave off bankruptcy at the carrier--but warned that a Chapter 11 filing may be inexorable.
On Tuesday, the No. 3 U.S. airline got another nail pounded into it, and its stock showed the damage. According to The Associated Press, a Merrill Lynch analyst lowered the Atlanta-based firm's rating from neutral to sell. He augured that the historic jump in oil prices would wipe out cost savings from Grinstein's radical restructuring program. The AP quoted a JPMorgan analyst as declaring it "all but assured" that Delta would file for Chapter 11 if it doesn't get a cash infusion in the near term--and oil prices may tighten lenders' pocketbooks.
Delta shares sank 27 cents, or 12.11%, trading at $1.96 late Tuesday afternoon on the New York Stock exchange.
Meanwhile, another troubled legacy had better news Tuesday. A U.S. bankruptcy judge permitted US Airways (otc: UAIRQ - news - people ) to forward its restructuring plan to creditors for a vote. The judge's OK constitutes a key step in lifting the carrier out of its second bankruptcy. CEO Bruce Lakefield said Tuesday's hearing was a "another good step" in US Airways' path to reorganization. He said the firm hopes to formally emerge from bankruptcy in late September or early October. And what timing: It was revealed Tuesday that investors of America West Holdings (nyse: AWA - news - people ), the parent of America West Airlines, will vote on Sept. 13 on whether to OK the firm's merger with US Airways. Things will heat up in autumn.
Are they serious? 
