Delta seeks 6 more months to file reorganization plan
Associated Press
Citing in part the time it will take to further cut costs, Delta Air Lines Inc., the nation's third-largest carrier, asked a bankruptcy court judge yesterday to give the company a six-month extension to file its reorganization plan.
Meanwhile, the Transportation Department signaled it would deny an antitrust exemption sought by the SkyTeam airline alliance, which includes Delta and Northwest Airlines Corp., which also is in bankruptcy.
Atlanta-based Delta, which filed for Chapter 11 in New York on Sept. 14, currently has a Jan. 12 deadline to exclusively file its reorganization plan and a March 13 deadline to seek acceptance of the plan from creditors.
In a filing with the court, Delta asked to extend the deadlines 180 days to July 11 and Sept. 9, respectively.
Once an exclusivity period ends, creditors are allowed to submit reorganization plans to the court.
"The debtors have made tangible progress toward their goal of developing a competitive cost structure while increasing revenues," Delta lawyers said in the filing. "However, as would be expected of companies as large as and with businesses as complex as the debtors', at this early stage there is a great deal more that needs to be done."
Delta had previously asked the court to reject its pilot contract so the airline could impose $325 million in concessions on its 6,000 pilots. But Delta asked the court to suspend the company's contract rejection request because of a tentative agreement on temporary pay cuts worth as much as $152 million a year that the sides worked out earlier this month.
Rank-and-file pilots must ratify the interim agreement by Wednesday for it to take effect.
The SkyTeam antitrust exemption request was prompted by Northwest's entry into the alliance last year after its partner, KLM Royal Dutch Airlines, merged with SkyTeam member Air France. Northwest has antitrust immunity to work closely on routes and pricing with KLM, but not with other SkyTeam members, which also includes Alitalia, Continental Airlines and CSA Czech Airlines.
The DOT said the airlines' routes overlap so much that little new service was likely to result from an antitrust waiver. It did allow codeshare agreements, which make it easier for passengers to book trips on a single ticket with multiple airlines.
"The carriers failed to demonstrate sufficient public benefits that would result from a grant of antitrust immunity to the new alliance," the DOT said.
The department will issue a final decision after the public comment period ends next month. Its preliminary decision yesterday follows the Justice Department's August objection to the antitrust exemption.
Northwest Airlines Corp., which filed for bankruptcy protection in September and has lost almost $4 billion since 2001, likely won't generate "significant" money until 2009 or 2010 even though it needs to spend billions to upgrade its planes, according to an investment banker hired by the carrier to advise it through its bankruptcy.
John Luth, president and chief executive officer of Seabury Group LLC, made the assessment of the airline's profitability in a special declaration that supported the airline's application to reject collective bargaining agreements with employees and a request to modify retiree benefits.
The declaration made by Luth showed up in court documents filed on Wednesday with the Bankruptcy Court in New York.