DAL repeats Chapter 11 warning
Delta repeats warning of potential bankruptcy
Bloomberg News
Delta Air Lines Inc., which operates a hub in Salt Lake City, said again Wednesday that it might have to file for bankruptcy if it can't reduce costs to stem losses.
Delta said in a regulatory filing that its ability to pay "significant obligations" and avoid bankruptcy this year will depend on jet-fuel prices and average fares. The price of fuel has increased 56 percent this year, and average fares rose less than 1 percent last month over 2004.
"If Delta is not successful in further reducing its operating expense and continues to experience significant losses, or if Delta's cash and cash equivalents and short-term investments otherwise decline to an unacceptably low level, Delta would need to seek to restructure under Chapter 11," the company said in a filing with the U.S. Securities and Exchange Commission.
The airline, which had a $1 billion first-quarter loss and reported $8.46 billion in losses in the past four years, said in May that it has $2.42 billion in debt and pension payments due in the last three quarters of the year. Atlanta-based Delta had $1.8 billion in cash and short-term investments as of March 31. The company is seeking a new U.S. law that would allow it to delay some pension payments.
Delta also said in the filing that a reorganization in Chapter 11 would be "particularly difficult" because the company has already pledged most of its assets as collateral for various transactions. That would hamper the company's ability to raise new financing.