Delta has money for BK exit now!

[Kristie]

ATLANTA, Jan. 30, 2007 – Delta Air Lines (Other OTC: DALRQ) announced today that it has obtained commitments for a $2.5 billion exit financing facility, marking a significant step forward for the company’s plan to exit bankruptcy in Spring 2007 as a strong, well-capitalized standalone carrier.

The exit facility will be co-led by six financial institutions – JPMorgan, Goldman Sachs & Co., Merrill Lynch, Lehman Brothers, UBS, and Barclays Capital – and will consist of a $1 billion first-lien revolving credit facility, a $500 million first-lien Term Loan A, and a $1 billion second-lien Term Loan B. The facility will be secured by substantially all of the first-priority collateral in the existing debtor-in-possession facilities.

Edward H. Bastian, Delta’s executive vice president and chief financial officer, said: “This is an important milestone in the successful implementation of our restructuring plan. The competitive terms and unique structure of this financing package reflect our considerable progress and the soundness of Delta’s standalone plan of reorganization. We appreciate the confidence the financial markets are showing by making this commitment in support of Delta’s standalone plan. We look forward to partnering with our lenders through the exit process and into the future.”

As co-lead arrangers of the exit facility, the financial institutions made the following statements in support of the proposed transaction:

* "JPMorgan is pleased to partner with our long-time client Delta in leading their benchmark financing. We are looking forward to aiding Delta in their successful reorganization and standalone exit from bankruptcy.”
* "Goldman Sachs appreciates the opportunity to take a leadership role in Delta's landmark exit financing and believes Delta is well positioned to emerge from bankruptcy. Goldman Sachs has had a long-standing relationship with Delta and looks forward to helping Delta pursue its strategic plan."
* "We are pleased to help lead Delta's exit financing. Merrill Lynch looks forward to continuing to work with Delta Air Lines as the company executes its standalone strategic plan."
* "Lehman Brothers is delighted to play a leading role in this important financing for Delta, and to support the company as it emerges from bankruptcy as a strong global carrier.”
* “UBS is excited to be involved in Delta's exit financing and helping Delta emerge on a standalone basis."
* “Delta Air Lines is an icon in the airline industry and Barclays Capital is honored to play a key role in the remarkable turnaround of the last 16 months. We look forward to contributing to the next chapters of this impressive story.”

Proceeds from the facility will be used by Delta to repay its $2.1 billion debtor-in-possession credit facilities led by GE Capital and American Express, to make other payments required upon exit from bankruptcy, and to increase its already strong cash balance.

Mr. Bastian continued, “Delta has made enormous progress over the past 16 months in transforming the airline into a strong, healthy, and vibrant competitor. While many companies use the bankruptcy process simply to shore up their balance sheet and reduce debt, our company undertook a top-to-bottom re-engineering that touched every aspect of how we do business. We are using the bankruptcy process to improve and strengthen our airline.”

Delta’s accomplishments have included:

* Reduced costs and improved unit revenues, positioning the airline to emerge from Chapter 11 with the lowest unit costs of any network carrier. Delta has improved productivity and eliminated approximately $2 billion in annual costs.
* A stronger, more balanced network as a result of rapid expansion of international routes with the highest profit potential. In the past year Delta has undertaken the largest international expansion in its history, and is a leader across the Atlantic with flights to 31 trans-Atlantic destinations.
* Significantly reduced net debt from $17 billion to an anticipated $7.5 billion by the end of 2007.
* Improved liquidity position, totaling $2.6 billion in unrestricted cash, cash equivalents and short-term investments as of December 31, 2006.
* An expected consolidated equity value upon exiting Chapter 11 estimated by The Blackstone Group to be between $9.4 billion and $12 billion.

Importantly, customer service standards and operational performance were improved as Delta achieved these gains, with the prestigious J.D. Power and Associates customer satisfaction survey for 2006 ranking Delta as one of the top two domestic network airlines.

it's a good start!!

[Bigsweetie]

That's awesome news!! A reason to be hopeful!

[roz]

http://www.btnmag.com/businesstravel..._id=1003539409

I really wonder if Parker's real focus is to drive up the total cost to exit for DAL so they have difficulty competing. In the meantime, he can go after the prize--UAL. Just speculation...

[Kristie]

interesting thought!! UAL would work better with routes and all

[rgphib]

http://money.cnn.com/2007/01/31/news/companies/usair_delta/index.htm?source=yahoo_quote

Delta creditors end US Air's bid

US Air withdraws its nearly $10 billion cash and stock offer for larger carrier after creditors' committee fails to back bid.

January 31 2007: 12:05 PM EST
NEW YORK (CNNMoney.com) -- Delta Air Lines' creditors rejected the hostile takeover bid for the bankrupt airline by US Airways Group, leading the smaller rival to withdraw the bid Wednesday.
US Air (Charts) announced late Wednesday morning that the creditors' committee, whose approval Delta needs to emerge from bankruptcy as an independent carrier, would not give their affirmative support to the nearly $10 billion cash and stock offer.
"We are disappointed that the committee, which has been chosen to act on behalf of all Delta creditors, is ignoring its fiduciary obligation to those creditors," said a statement from US Air CEO Doug Parker.
Shares of US Air lost about 2 percent after the announcement.
Delta (Charts) did not have an immediate comment.
Many supporters and critics of US Air's bid for Delta agreed that if those carriers had merged, that could have sparked a round of consolidation among carriers including AMR Corp. (Charts) unit American Airlines, UAL Corp. (Charts) unit United Airlines, Continental Airlines (Charts) and Northwest Airlines (Charts), which like Delta is operating in bankruptcy.
Such combinations could have left about 80 percent of the nation's air travel in the hands of three much larger airlines, and led to capacity reductions and fare increases in many markets.
Many analysts have said they now believe the chance of consolidation in the industry is far less likely. Parker agreed with that view in a conference call Tuesday.