Eyeing new image, Delta is leaving bankruptcy today
ATLANTA -- Delta Air Lines Inc. has undergone a major face lift during more than a year and a half in bankruptcy, but other changes are on the way as the nation's third-largest carrier exits Chapter 11 today.
Among other things, it has set aside $10 million for a rebranding effort, the company's chief bankruptcy lawyer, Marshall Huebner, said in court recently. Executives at Delta also have said that after the company exits bankruptcy it will consider shedding Comair, a Delta subsidiary that provides regional service for the airline.
Delta's outgoing chief executive, Gerald Grinstein, said last week that he did not expect any immediate action on Erlanger, Ky.-based Comair, since Delta has a new board of directors.
Doug Abbey, a partner in the aviation consulting firm Velocity Group, said he expects Delta to make a decision on Comair fairly quickly.
"I suspect that's one of the first orders of business coming out of bankruptcy," Abbey said. "I can't even predict how that's going to go."
Delta's board also will be looking for a new CEO to replace Grinstein, 74, who has said he plans to step down once his successor is appointed.
Meanwhile, a Delta spokeswoman, Betsy Talton, said "additional investments in Delta's image will be unveiled" at a news conference at the company's Atlanta headquarters a few hours after the airline exits bankruptcy protection. Talton declined to give details ahead of the announcement.
Repainting its planes is something that could help Delta with its brand image, but would take time to complete for a fleet consisting of several hundred aircraft, Abbey said.
"I think it's appropriate because this is clearly a new Delta, but in and of themselves, these things tend to be a very long-term project," Abbey said.
A new advertising campaign also could be in Delta's future, Abbey said.
The initiatives would be on top of major changes that Delta put in place while in bankruptcy, including restructuring its fleet, expanding international service, improving aircraft cabins, cutting costs, and eliminating more jobs.
On the financial side, existing shares of Delta's stock will be canceled at the time the airline exits bankruptcy. Shares of new stock will be issued to creditors and begin trading publicly on the New York Stock Exchange on Thursday. That day, Delta executives will ring the closing bell from the floor of the NYSE.
The company says 400 million shares will be issued, putting the target initial public offering at $23.50 a share to $30 a share, based on Delta's projected valuation of $9.4 billion to $12 billion.
