[Kristie]

I wish I could keep tabs on this better, but I only have enough time lately to hear it through the grapevine...

I don't know yet what happened at yesterday's hearing.

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Delta bankruptcy hearing continues; aircraft sale approved

Lisa Treon
11/29/2005

The Delta Air Lines hearing in the U.S. bankruptcy court continued this week with some harsh words from the judge for both Delta and its counsel.

One issue resolved: Judge Prudence Carter Beatty said she would allow Delta to sell an undisclosed number of aircraft including Boeing 737s, Embraer 120s and Boeing 767s. No information was given on potential buyers or prices. Permission was also given to reject an Atlanta office lease; no details were disclosed.

During the hearing, Beatty covered a wide range of issues surrounding the bankruptcy plan. She said Delta may have been wrong to spend $2.4 billion to buy back its own shares in the years before it filed for bankruptcy in September. "It is a question of if you had that money rather than had spent it that way, you might not be in the position you are in," she said.

On Monday, she said the carrier's motion seeking to void its pilots' contract had the taint of "union busting."

"The issue is whether or not at this time I should permit the rejection of the union contract," Beatty said. "One can talk about union busting and that is precisely what this kind of motion has the taint of..."

Beatty noted that she does not believe the court can enjoin a strike by pilots. "I don't have any jurisdiction of whatever you do," she said.

She also came down hard on Delta lawyer Jack Gallagher. "Frankly, I think you have a bias here," she told Gallagher. "It's a personal bias against the pilots."

Gallagher argued that the airline needed to weigh the pilots' rights against those of its 44,000 other employees. "There is not enough money left in this company to continue to pay these pilots," he said.

Earlier, the pilots' lawyer Bruce Simon grilled the carrier's chief financial officer, Edward Bastian, questioning the numbers in Delta's restructuring plan. "Your projection of your fuel expense is $100 million above what the market tells us today," said Simon, a lawyer for the Air Line Pilots Association, which represents Delta's 6,000 pilots.

Delta's plan for stemming its cash drain next year and regaining positive cash flow in 2007 was finalized in September, reflecting oil prices which peaked shortly after Hurricane Katrina. The plan is based on an estimate of jet fuel priced at $1.73 per gallon in 2006 and 2007. That compares with current market forecasts of $1.69 a gallon, Simon said, adding that each cent of added fuel cost is equivalent to $25 million to $26 million in costs on an annual basis.