Delta: Days Away from Bankruptcy

[HenryTo]

Obviously, I covered Delta too darn early, as usual:
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Delta Close to Bankruptcy Filing: Report

By TSC Staff
9/12/2005 8:52 AM EDT

Delta Air Lines (DAL:NYSE - commentary - research - Cramer's Take) is just days away from seeking bankruptcy reorganization according to a published report, a move that if it comes to pass would make the Atlanta-based carrier the third major U.S. airline currently operating under Chapter 11.

The Wall Street Journal reported that Delta is set to seek court protection from its creditors as early as this week. The airline is close to reaching a deal on $1.7 billion in financing that would maintain its operations during the bankruptcy, the report indicated.

Bankruptcy rumors have been following Delta for some time as the airline has been dogged by liquidity problems amid the industry's competitive strains and high fuel and labor costs. Minnesota-based Northwest Airlines (NWAC:Nasdaq - commentary - research - Cramer's Take) has also been the subject of considerable Chapter 11 speculation, and that carrier has said it must cut costs in order to avoid a bankruptcy filing.

Last week Delta, the third-biggest airline in the nation, announced plans to sell 11 Boeing 767-200 planes in an effort to raise cash and streamline its fleet. In August, Delta agreed to sell its regional airline unit Atlantic Southeast Airlines to SkyWest (SKYW:Nasdaq - commentary - research - Cramer's Take) for $425 million.

Should Delta file for bankruptcy, the company would join UAL (UALAQ:OTC BB - commentary - research - Cramer's Take), the parent company of United Airlines, and US Airways (UAIRQ:OTC BB - commentary - research - Cramer's Take) undergoing court-monitored restructurings. UAL said last week it should exit Chapter 11 early next year, while US Airways is merging with America West (AWA:NYSE - commentary - research - Cramer's Take).

Shares of Delta fell 19 cents to 91 cents in premarket trading Monday.