Delta staves off bankruptcy
By reaching an agreement with its pilots union, Delta Air Lines averted threatened bankruptcy, officials said.
The airline announced a tentative agreement with the union that has until 11 November to approve it.
Delta, the third-largest airline, was prepared to file for Chapter 11 bankruptcy protection if an agreement had not been reached.
That move would have put a third major carrier in bankruptcy. United, the second-largest airline, filed for Chapter 11 protection in December 2002, while US Airways, the seventh largest, made its second filing for bankruptcy protection in two years on Sept. 12.
CEO Gerald Grinstein said bankruptcy is still a possibility, but “we are making significant progress and are on course with our customer-focused transformation plan.”
“The pilot agreement, which still is subject to ratification by the pilot membership, is one very important and necessary piece of a complex puzzle that must come together in time to begin to reverse the impact of high costs, including unrelenting high fuel prices, compounded by low revenues, and to stem our cash drain,” said Mr Grinstein.
Delta has lost $5.5 billion since 2000, and its available cash has shrunk from $2.7 billion at the end of 2003 to $1.45 billion at the end of the third quarter.
The new financing plan is in addition to a $600 million agreement reached by Delta earlier this week with American Express Travel Related Services, along with a separate deal reached with holders of some of its notes.
As recently as four years ago, Delta was considered one of the airline’s best-managed and efficient airlines, with extensive East Coast and international routes, along with its shuttle linking New York, Boston and Washington.
But in 2000, the airline signed a contract with its pilots that made them the highest-paid in the industry.
In recent months, Delta said it would concentrate on flights from its hubs in Atlanta, Cincinnati and Salt Lake City. The airline is undertaking an extensive overall of its flights this winter.
Report by David Wilkening
David
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