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Hot off the Presses:

Delta Air Lines estimates that Comair’s assets would be worth $920 million to just over $1 billion if both companies were forced to liquidate.
The disclosure was part of an amended reorganization plan by Delta that details how it would satisfy claims against its Erlanger-based subsidiary.
The liquidation value is considerably less than the nearly $2.3 billion book value Delta assigns to Comair.

OAS_AD('ArticleFlex_1'); Part of the reason for the difference in values is a major portion of Comair’s assets are money owed by Delta that would not be paid in a liquidation. A total of $573 million worth of Delta IOUs to Comair would not get paid because in a liquidation Delta and Comair those assets would be pooled together.

Delta also estimates Comair’s nearly $1.2 billion worth of aircraft and other flight equipment wouldn’t likely fetch top dollar in liquidation – losing as much as $531 million. The sale of other property and assets could see similar markdowns totaling $189 million.

Delta estimates Comair’s unsecured creditors, who are owed $800 million, would recoup 76 to 100 cents on the dollar under its plan of reorganization that would give them new stock in a reorganized company. Delta, which is striving to exit bankruptcy this year as a standalone company, estimates its value will be $9.4 billion to $12 billion.

Delta is in the midst of fighting off a hostile takeover attempt being waged by US Airways, which has offered Jan. 10 more than $10 billion worth of cash and stock to creditors for the Atlanta airline. The Jan. 10 offer was the Tempe, Ariz.-based airline’s second offer for Delta, representing a 20 percent premium on an initial unsolicited bid made in November.

Delta management plans to discuss with its board soon its evaluation of US Airways’ recently increased takeover bid, the company said in the Friday filing.

“Delta’s management and advisers are currently evaluating the revised US Airways proposal, in anticipation of making a further presentation to Delta’s board of directors in the near future,” Delta said in the filing.

A Feb. 7 bankruptcy court hearing in New York has been scheduled to discuss the disclosure statement to Delta’s reorganization plan. If the statement, which includes details of Delta’s operations, is approved, Delta could begin soliciting votes for approval of its reorganization plan.

US Airways is asking Delta’s official creditors committee to support postponing that hearing. It has said that if that condition is not met by Feb. 1, along with several other conditions, it will revoke its bid for Delta. Delta’s official creditors committee has so far been silent about its position on US Airways’ revised offer.

hatetobreakit2u

so are they trying to sell comair?

mccube5

seems like they are trying to luquidate the company, selling it doesnt seem to be a priority...

cyrcadian

Uh, no.

Delta is trying to place a liquid value on all of its assets, including Comair. They want to be able to show the creditors that they are worth a certain amount as a standalone company. As long as the value of the company and its assets are higher than the proposed bid by USAirways, the creditors have no choice but to allow Delta to emerge from bankruptcy as a standalone carrier.

It says in the beginning of the article how Delta is even trying to estimate on the high side the value of Comair.

It's funny how Delta uses the same smoke and mirrors money fudging with their creditors as they do with their pilot group and Comair's pilot group.