Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Delta Seeking DIP Financing For Ch 11 Filing  
User currently offlineComorin From United States of America, joined May 2005, 4896 posts, RR: 16
Posted (8 years 10 months 2 weeks 6 days 5 hours ago) and read 6058 times:

Item in Washington Post:

http://www.washingtonpost.com/wp-dyn...le/2005/09/09/AR2005090902015.html

Explains the waiting, they're trying to line up 1.7B$ in financing.

69 replies: All unread, showing first 25:
 
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 1, posted (8 years 10 months 2 weeks 6 days 4 hours ago) and read 5964 times:

Your title is jumping to conclusions. Delta obtained this same financing 1 year ago prior to renegotiating the pilot contract. You do not negotiate with creditors or labor without having the financing in place. That presents them with a choice, work with us now or work with us later.

[Edited 2005-09-10 16:57:09]

User currently offlineTPASXM787 From United States of America, joined Mar 2005, 1730 posts, RR: 20
Reply 2, posted (8 years 10 months 2 weeks 6 days 4 hours ago) and read 5938 times:

Padcrasher, they're going to file before 10/17. They have to. Anyone with a basic knowledge of accounting can see that their debts far outweigh their assets and they are hennoraging money every day.

I love DL, I have flown them many times, but it's only a matter of time before DL and most likely NW go Chapter 11.



This is the Last Stop.
User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 3, posted (8 years 10 months 2 weeks 6 days 4 hours ago) and read 5907 times:

There is no significance to 10/17, as I've said many times before.

Of course you will not provide us one single aspect of the new law that even matters to Delta will you? Nor will be you be able to show by the numbers how the cash position/burn is insurmountable.

It must be nice being part of the herd. Never really having to do the math. Never really understanding the operation. Just repeating what you heard.


User currently offlineBicoastal From , joined Dec 1969, posts, RR:
Reply 4, posted (8 years 10 months 2 weeks 6 days 4 hours ago) and read 5896 times:

No, Padcrasher, this is much different than the financing Delta lined up a year ago. They're going Chapter 11 with this new financing. They tried to avoid Chapter 11 with the loans they received a year ago. But, it didn't work. Now they're forced into a less desirable alternative to survive.

User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 5, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5880 times:

Quoting TPASXM787 (Reply 2):
I love DL, I have flown them many times, but it's only a matter of time before DL and most likely NW go Chapter 11.

The only problem NW has is fuel costs and in securing lower labor costs from their unions - they all but appear to have busted AMFA's strike, the ALPA pilots are ready to deal, and the FA's will pretty much do what the other two unions do so combined with the fact that NW still has $1.7B in cash, NW very well may not file.

I'd like to see the cost comparison between their DC-9 which is paid for but uses more gas and more maintenance and compare that with even say a lease of Embraer's new E-Jets (E-170-E-195.) If NW didn't have 150+ paid-for but expensive to operate compared to the new jets on the market DC-9's, NW's gas bill would could be significantly lower.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 6, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5855 times:

No Bicostal its the same exact financing. You are referring to other types of loans to save and obtain more cash.




Just-in-case financing expected at Delta

Staff report
Published on: 09/10/04


A Wall Street analyst expects Delta Air Lines to soon announce that it has arranged debtor-in-possession financing in case it goes into Chapter 11 status.

The analyst, Robert Ashcroft of UBS, said he believes the company and its pilots will achieve deals that could avert a filing.



But in a research note he added: "Struggling on the brink is dangerous, so there is a chance the parties step off the cliff by mistake. . . . Expect an announcement in the near future that Delta has arranged debtor-in-possession financing."

So-called DIP financing is used by companies to ensure a source of capital and credit during a bankruptcy case.

Delta this week said it could go to court at the end of this month unless it stems a wave of pilot early retirements that began earlier this year.

The pilots can wait until the day before they leave to inform the company — possibly disrupting schedules if too many leave on short notice. They can collect part of their benefits in a lump sum that Ashcroft said is typically around $300,000.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 7, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5837 times:

Yet another article from the Times from last year.

New York Times


Delta Air Lines has begun arranging the financing it will need if it seeks bankruptcy protection, something Wall Street analysts, industry executives and finance experts say could happen within weeks, people with direct knowledge of Delta's actions said yesterday.

Delta, which is based in Atlanta, is holding discussions with lenders like GE Commercial Finance, which provided it restructuring money last year and could do so again, in or out of bankruptcy, these people and others in the financial community said. A spokesman for GE Commercial declined to comment.

The airline is also exploring the sale or refinancing of its two commuter lines, Comair and Atlantic Southeast Airlines. And it is looking for more savings from employees, who have already taken $1.4 billion a year in wage and benefit cuts, although it does not plan to reduce wages.

Delta has lost nearly $10 billion since 2001, with its losses accelerating over the last year. Its chief executive, Gerald Grinstein, had emphasized a desire to avoid Chapter 11 bankruptcy, which it barely averted last October by obtaining $1 billion in cuts from its pilots. But last month, Mr. Grinstein said that circumstances beyond Delta's control, namely higher oil prices and industry competition, could force its hand.


***************************

Any more chicken littles out there who want to go another round?


User currently offlinePositiverate From United States of America, joined May 2005, 1590 posts, RR: 8
Reply 8, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5831 times:

Quoting Padcrasher (Reply 3):
There is no significance to 10/17, as I've said many times before.

Um, actually there is. October 17 looms as a significant date because pending amendments to the federal bankruptcy code will implement less favorable terms for debtors. In simple terms, that means if the airline does plan to enter bankruptcy protection, it will be better served by getting it over with quickly rather than waiting and facing a stricter bankruptcy code.


User currently offlineComorin From United States of America, joined May 2005, 4896 posts, RR: 16
Reply 9, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5818 times:

The title merely indicates the contents of the link!  Smile

Delta's situation today is very different from a year ago. The $375M cuts sought then have been wiped out by fuel escalations (1c rise = $25M). While NWA's balance sheet can support a threat of Ch 11 unless concessions are made, Delta's balance sheet no longer supports that strategy, and will file as soon as the financing is ready. DIP financing is now being put in place to ensure a bankruptcy filing that doesn't end up in a liquidation or auction, and preserves Delta's value as a going concern.

Since DIP financing assumes a supercredit status, I wonder what collateral is left at Delta to secure this funding without subordinating senior creditors. If such collateral doesn't exist, debt repayment can still get pushed to the top of the heap as an Administrative Expense under bankruptcy laws, I guess...


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 10, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5812 times:

Um, then you will tell us "exactly" what aspect of the law benefits Delta and how it applies exactly.

Then I'll whip out my transcript of the CFO's discussion of said law and destroy your feeble attempt.


User currently offlinePositiverate From United States of America, joined May 2005, 1590 posts, RR: 8
Reply 11, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5760 times:

Quoting Padcrasher (Reply 10):
Then I'll whip out my transcript of the CFO's discussion of said law and destroy your feeble attempt.

Take a pill and lose the attitude j.o.

The changes take effect regarding business reorganization under Chapter 11, including tighter restrictions on executive compensation and required deposits for utility services. Other changes to the law give company creditors such as landlords and suppliers more say in various aspects of the bankruptcy process. For example, creditors will be allowed to submit their own reorganization plan if a debtor does not produce one within 18 months after filing. Every analyst is saying if they file they have to do it before 10/17.

Of course Grinstein and Palumbo/Bastian are saying 10/17 doesnt mean anything. They don't want a run by the pilots on the pension plan to get their lump sums, which is clearly what would happen if they acknowledged such a deadline. Quit drinking the Kool-Aid.


User currently offlineComorin From United States of America, joined May 2005, 4896 posts, RR: 16
Reply 12, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5753 times:

Quoting Padcrasher (Reply 10):
Then I'll whip out my transcript of the CFO's discussion of said law and destroy your feeble attempt.

Before you whip anything out, may I ask you why you think Ch 11 is a Chicken Little- Sky Falling scenario? The Bankruptcy courts are more like the US Cavalry riding in to save Delta. Sure beats liquidation, or being run by a bunch of kids in a distressed-debt hedge fund...


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 13, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5747 times:

Quoting Comorin (Reply 9):
Delta's situation today is very different from a year ago. The $375M cuts sought then......

It's good to know Comorin that you're on the ball. You are one of the very few that know that Delta only sought on $375 million in cuts last year.

That's why your prediction of Chapter 11 filing carries so much weight.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 14, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5716 times:

They addressed each of the 5 aspects of the law, and gave a valid, legitimate reason only one would apply to Delta (length of time limit for restructuring without challenges to plan of 18 Months) and why it matters not in the least to Delta as they have a restructuring plan 95% in place.

Next?


User currently offlineOPNLguy From , joined Dec 1969, posts, RR:
Reply 15, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5709 times:

Quoting Positiverate (Reply 11):
Take a pill and lose the attitude j.o.

I wonder if A.net's servers are going to be able the load of all the "I told you so" messages to Padcrasher "should" Delta seek Chapter 11 protection....


User currently offlineMidway2AirTran From United States of America, joined Jul 2003, 864 posts, RR: 2
Reply 16, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5706 times:

Quoting Padcrasher (Reply 10):
Um, then you will tell us "exactly" what aspect of the law benefits Delta and how it applies exactly.

No matter what happens with the BK laws still does not change the fact that DL is in big debt and lacks ability to pay it making a filing very likely for the time being. The seeking of DIP is obviously in preparation that they expect it will happen.

If they wait till after Oct.17 management will lose some control over the reorganization to the judge/large creditors and the timing to exit is short. It would make more sense to some not to have to deal with those new rules.



"Life is short, but your delay in ATL is not."
User currently offlinePositiverate From United States of America, joined May 2005, 1590 posts, RR: 8
Reply 17, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5694 times:

Quoting Padcrasher (Reply 14):
They addressed each of the 5 aspects of the law, and gave a valid, legitimate reason only one would apply to Delta (length of time limit for restructuring without challenges to plan of 18 Months) and why it matters not in the least to Delta as they have a restructuring plan 95% in place.

Of course they did because, like I said, they do not want a run on the lump sums from the pilot pension plan should they acknowledge a 10/17 deadline. Did they mention that? Or did you miss that because you were getting more Kool-Aid then?  Smile


User currently offlinePositiverate From United States of America, joined May 2005, 1590 posts, RR: 8
Reply 18, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5686 times:

Quoting OPNLguy (Reply 15):
I wonder if A.net's servers are going to be able the load of all the "I told you so" messages to Padcrasher "should" Delta seek Chapter 11 protection....

Believe me, I hope they don't have to and I am wrong. No one wants to go through a BK filing; it's unpleasant.


User currently offlinePadcrasher From , joined Dec 1969, posts, RR:
Reply 19, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5683 times:

Quoting OPNLguy (Reply 15):
I wonder if A.net's servers are going to be able the load of all the "I told you so" messages to Padcrasher "should" Delta seek Chapter 11 protection

I already have a rough draft of my "October 18th" thread...LOL

It may be two days before I lay by bloody cleaver down...LOL


User currently offlineAa777jr From , joined Dec 1969, posts, RR:
Reply 20, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5692 times:

Talk to anyone that knows anything about aviation futures and they will all tell you it is necessary for DL to file for Chapter 11 to reorganize their company. It's very necessary to allow this to happen so the pilot contracts can be torn up and renegotiated. They need to be paid less and spend that extra cash on more planes and service. If they continue to bleed this badly they will lose a hub, SLC or CVG.

Quoting TPASXM787 (Reply 2):
they're going to file before 10/17.

 checkmark 

Quoting Positiverate (Reply 11):
Take a pill and lose the attitude j.o.

 rotfl 

Go Delta?


User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6578 posts, RR: 24
Reply 21, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5676 times:

Quoting Padcrasher (Reply 14):
They addressed each of the 5 aspects of the law, and gave a valid, legitimate reason only one would apply to Delta (length of time limit for restructuring without challenges to plan of 18 Months) and why it matters not in the least to Delta as they have a restructuring plan 95% in place.

Unfortunately, the restructuring plan they have in place isn't working so well. The restructuring plan from last year called for an expansion of CVG...but now they are going against the plan and shrinking CVG. The restructuring plan from last year planned on oil being at $35 a barrel. While I guess that is still possible, it doesn't seem likely. Of course the hardest part will be dealing with all the creditors...many of whom DL has a very poor relationship with.

Given how slow DL's management has been to do anything to save the company, I think DL would struggle to meet the 18 month requirement.


User currently offlineOPNLguy From , joined Dec 1969, posts, RR:
Reply 22, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5672 times:

Quoting Positiverate (Reply 18):
Believe me, I hope they don't have to and I am wrong. No one wants to go through a BK filing; it's unpleasant.

Agree completely. That said, 11 is better that 7, especially under the current rules and not those that take effect in October....


User currently onlineBigGSFO From United States of America, joined Jun 2005, 2911 posts, RR: 6
Reply 23, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5669 times:

It's also my understanding that under the new law filing ch. 7 (liquidation) will be much more difficult if not impossible. Thus creditors will not be able to get their hands on the assets that were used as collateral so they might not lend the money in the first place.

Remember bankruptcy is not a death sentence. It's a reorganization. DL isn't going away - probably never will. But the laws allow them some breathing room to rearrange their debt and become more efficient. If UA's three year dog-and-pony show in bankruptcy proves anything it's that the courts will bend over backwards to keep an airline aloft.


User currently offlineComorin From United States of America, joined May 2005, 4896 posts, RR: 16
Reply 24, posted (8 years 10 months 2 weeks 6 days 3 hours ago) and read 5669 times:

Quoting Padcrasher (Reply 13):

Thank you, Padcrasher! I am glad you feel that way. The $375M I was referring to are the cuts currently being sought ($275M from Pilots, $100M from others) - My error in phrasing. I did read the Times article before I posted, simply as it is linked in my reference article.

Point is, if you look at the financials, and the conclusions reached about the same set of numbers by smarter people than me at Morgan Stanley, UBS and A.Net, Ch 11 is a no-brainer.

We haven't even touched on the topic of Ch 7....

Padcrasher, I have to go now. I do hope other Anetters will pitch in and help you see the light.


25 OPNLguy : Those might be viewed by some as indications that you need to get a life....
26 Padcrasher : How often does this happen with you? Really be honest? Well what Q did they not make their goals? If fact you know the restructuring plan has gone ri
27 FlyPNS1 : So what if they made their goals? The goals they set weren't high enough. If you set the bar low enough, anyone can achieve their goals...doesn't mak
28 Padcrasher : No you're confused again. The TP was never sold as a BK proof plan. What did happen and what you know happened is a continued surge in fuel prices. Yo
29 BigGSFO : I agree. In addition it would appear DL is scrambling to raise cash between the ASA and 767 sales and CVG reduction. It might be too little too late.
30 FlyPNS1 : If it worked like a charm, DL wouldn't be doing so poorly. The restructuring plan made UNREALISTIC assumptions about fuel. DL management assumed fuel
31 Post contains links Srbmod : Even the Atlanta Fishwrapper is getting in on the speculation: Delta board meets; bankruptcy talk grows To sum up the article: The DL Board of Directo
32 Hiflyer : Time is not on DAL's side in this endeavor. The same sources DAL is trying to arrange from are also undoubtedly being hit by NWAC and possibly even I
33 Avpilot01 : I used to work for DL, I would hate to see them file for CH.11, however, I think it is the best decision in order to get their costs down to reasonabl
34 FRA2DTW : While most of you are focused on 10/17, the filing is most likely to come before Sept. 30. That is the date the next wave of senior pilots can take ea
35 LTBEWR : If they want to do it before 9/30, then DL better do it fast as 9/30 is a Friday. I wouldn't be surprised that they do a deal where they file for BK a
36 TPASXM787 : 10/17 will be the last possible date, but filing earlier wouldn't surprise me at all. I'd love to see all the airlines chugging along making money. It
37 AirRyan : That's what I was going to mention - looks like UA has taken their sweet time in Ch. 11 and is only now about to finally emerge after 3 years or so.
38 MD88Captain : You guys are really over-emphasizing pilot retirements. Most if not all have pilots that can leave have left. Those remaining have other circumstances
39 Alitalia744 : Sad but probably very true. MD88, assuming you fly for DL, hats off to you and all the employees of DL. Hopefully, (I'm no financial expert), with BK
40 Panamair : Hindsight is always 20/20..when the Plan was being hatched, even the most pessimistic did not conceive of oil at $65-$70 a barrel (heck, even WN and
41 Positiverate : PadCrasher: still waiting for you to whip out your CFO transcript and tell me why I'm wrong about the 10/17 deadline and the run on the pension plan b
42 Positiverate : Really the only problem they have at DL is fuel costs too...
43 Positiverate : Brilliant.
44 Post contains links and images BOS2LAF : Oh ye of too much faith, maybe you should check this out... Northwest union doubts deal is near (Yahoo news) So, if the new laws aren't of significan
45 Post contains images Brokenrecord : Whiskey Tango Foxtrot? Over.
46 AirRyan : Ouch, I did not know that. How many of you all Mad Dog pilots might be able to find a job at say AA if worse comes to worse? Yet another reason why I
47 Midway2AirTran : A perfect resolve for the industry and would be for oil to trade up to $80/barrel than drop to $30 afterward. ^Just as Joe Leonard said in the special
48 DeltaMIA : They aren't on a separate operating certificate. The only assets are the planes and a couple of slots at LGA.
49 Comorin : Being Saturday nite and all, I thought I'd add my plan for Delta's salvation: 1. Delta's employees chip in 2.5K each ($168M) and take Delta private. 2
50 Voyager747 : I think that Delta will pull out of bankruptcy protection just as US Airways did and United. My main concern now is that if Delta pulls out of bankrup
51 Lowecur : I'm interested in that CFO's transcript. Does the CFO at DL think 18 months to file a restructuring plan is plenty of time to put together a viable p
52 Bucky707 : I think Delta will file before Oct 17, but I do believe the new laws do not worry Delta management. Delta has been pretty much restructuring the comp
53 Padcrasher : Of course he does. He point blank said the 18 Month time frame was more than enough. They have the majority of the plan together already. Baloney. Th
54 Padcrasher : This is how it works. You talk BS. I challenge you by asking a simple question. "What is the specific aspect of the law that applies to Delta and how
55 Post contains images OttoPylit : You mean like the employee-owners of UA did, and who, when UA went into BK, lost that ownership? Only 2 planes? And what 2 airplanes would that be? W
56 Positiverate : No, this is how it works: I answer your question, than pose another question to you, and you run and hide; probably because the party line you are es
57 Bucky707 : For the record, we have very few pilots making 200K a year anymore, and it certainly is not the average.
58 DeltaMIA : While he maybe exaggerating on the actual pilot salary. Pilots are the largest work group whose yearly salaries are above 83k and thus a big reason f
59 Flightopsguy : Does not DIP financing require asset collateral? If so, with few unencumbered assets, would not DL be limited to having their existing creditors (who
60 Post contains images Comorin : Thanks for reading my post. Some clarifications: 1. We are not talking about BK here, so the 2.5K/employee is not at risk, after the company goes pri
61 Lowecur : So where's the transcript? Where's his reasoning point by point as to why the new law is no problem? Do you really believe that they won't take advan
62 OttoPylit : Yea Bucky, I know. I just used the $200,000 to make it obvious that the pilots are the highest paid work force and bring the average pay per employee
63 Positiverate : Where oh where has PadCrasher gone....where oh where can she be?
64 Lowecur : Bucky, DL needs major plastic surgery and not just a few nips and tucks. They need a major unwind on their use of the 50 seat RJ. ASA has been sold,
65 Comorin : DIP financing is low-risk financing by Banks, and the following applies: 1. DIP Lending gets put in place immediately after filing Ch 11. 2. It's a S
66 NYCAAer : None. We have well over 2,500 pilots on furlough and they must be recalled to work before we can hire anyone new to American.
67 Bucky707 : I agree that there need to be some big changes to our regional network, the 50 seater being the key thing that is killing us. I disagree with you on
68 Positiverate : Pad Crasher: Awfully quiet...
69 Padcrasher : Had to fly to ATL little boy. I see you researched the bankruptcy law. Can you now tell us how it applies to Delta?
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
How Does NW Filing For Ch.11 Affect KLM? posted Fri Sep 16 2005 01:56:58 by Checo77
Tomorrow's The Big Day! Ch 11 Filing For UA? posted Sun Dec 1 2002 19:09:42 by 727LOVER
NW And DL Could File For Ch. 11 Protection posted Tue Sep 13 2005 22:11:22 by KC135TopBoom
Max Allowed Time For CH 11? posted Thu Sep 8 2005 01:34:08 by CV580Freak
U Gets More Time For Ch 11 posted Thu Mar 31 2005 19:04:53 by Ouboy79
Shuttle America Files For Ch. 11 posted Wed Apr 18 2001 16:10:25 by Boeing757/767
NW Ch. 11 Exit Financing (Possibility) posted Fri Sep 23 2005 20:25:37 by NASOCEANA
Delta Just Filed For Chapter 11! posted Wed Sep 14 2005 22:50:02 by Chiawei
Delta Air Lines To File For Chapter 11 Protection posted Wed Sep 14 2005 22:05:41 by Positiverate
Delta DIP Financing? posted Wed Aug 10 2005 05:25:44 by Aa777flyer