Delta Air Lines shares fall 22.7% on report carrier to seek bankruptcy protection soon
ATLANTA -- Delta Air Lines Inc., the nation's third-largest carrier, plans to file for bankruptcy protection in New York as early as tomorrow, according to an industry consultant who has been informed of the company's plans.
Delta's stock tumbled 22.7 percent in heavy trading yesterday on the New York Stock Exchange.
The consultant, who was not authorized to disclose the information and thus spoke on condition of anonymity, said Delta is working with GE Commercial Finance and other creditors to arrange roughly $2 billion in debtor-in-possession financing. The money would allow the airline to operate in bankruptcy.
Atlanta-based Delta, which has lost nearly $10 billion since January 2001, likely will pledge the few remaining assets not already pledged as collateral for loans as part of the bankruptcy financing agreement, the consultant said. ''There is nothing unencumbered after this," the consultant said.
The consultant said the filing was expected to come tomorrow afternoon but could be pushed to Thursday depending on when the bankruptcy financing is completed.
A Delta spokeswoman declined to comment, saying no decision about bankruptcy has been made. Two spokesmen for GE Commercial Finance also declined to immediately comment. Reached at his Connecticut home yesterday, Delta director Edward H. Budd said, ''Anything that's going to be talked about at Delta is going to come from Delta." Calls to the homes of four other company directors were not answered.
The bankruptcy filing would come as Delta has been unable to right itself amid persistently high fuel costs and heavy debt and pension obligations.
The filing would make Delta the third major US carrier to enter Chapter 11 since the 2001 terrorist attacks, joining Elk Grove Village, Ill.-based UAL Corp., parent of United Airlines, and Arlington, Va.-based US Airways Group, Inc., which has filed twice in the last three years.
Some smaller carriers, including Honolulu-based Hawaiian Airlines and Indianapolis-based ATA Airlines Inc., also have filed for bankruptcy in recent years.
If it follows the pattern of most big airline bankruptcies, Delta's existing shares would eventually become worthless and portions of the airline's existing debt would be exchanged for equity in a reorganized Delta.
