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American Express Advances $350 Million To Delta  
User currently offlineKarlB737 From United States of America, joined Mar 2004, 3105 posts, RR: 10
Posted (8 years 11 months 3 weeks 2 days 2 hours ago) and read 2115 times:

Courtesy: MarketWatch

http://www.marketwatch.com/news/stor...5D4156E127%7D&dist=rss&siteid=mktw

2 replies: All unread, jump to last
 
User currently offlineTWFirst From Vatican City, joined Apr 2000, 6346 posts, RR: 52
Reply 1, posted (8 years 11 months 3 weeks 2 days 2 hours ago) and read 2088 times:

M E M O R A N D U M

Subject: DELTA AIR LINES FILES CHAPTER 11

Date: September 15, 2005

To: American Express Employees in the U.S.

From: Al Kelly, Group President


Yesterday, both Delta Air Lines and Northwest Airlines announced that they have filed for Chapter 11 bankruptcy protection. Given our relationship with Delta, I am writing to address questions some of you may have about this development.

As you know, the news about Delta has been widely anticipated for some time. Delta has been dealing with severe financial pressure and large operating losses due to many factors, including record fuel costs, pricing pressures, pension costs and debt expense. Although they have made progress on an aggressive transformation plan to reduce expenses and increase revenues, Delta has decided that the best way to restructure and get back on a strong financial footing is to file for bankruptcy.

Delta will continue normal business operations while under bankruptcy protection. The airline has stated it is operating its full schedule of flights, honoring tickets and reservations as usual, and making normal refunds and exchanges. Delta's management and employees are working hard to advance their restructuring efforts and restore the airline to health.

We do not expect Delta's announcement to impact our business relationship with them:

- Card acceptance remains unchanged, as Delta continues to fly.
- Delta SkyMiles and SkyPoints cardmembers will not experience any changes to their accounts, and they can continue to earn and redeem points for awards on travel.
- Cardmembers can continue to redeem Membership Rewards points for flights on Delta.
- Employees and customers can continue to book travel on Delta, which remains a key member of our travel program.

However, the filing will likely change some aspects of our financial relationship with Delta. As you may recall, last year American Express began participating in Delta's restructuring program by pre-paying $500 million for future purchases of Delta SkyMiles rewards points and providing a $100 million loan as part of a new credit facility with other lenders. As Delta said in its announcement, they are now repaying those debts, and we are working towards an agreement for us to replace the previous financing with a new $350 million prepayment as part of what is known as debtor in possession (DIP) financing. While there is always uncertainty and risk associated with a bankruptcy filing, we are comfortable with our level of exposure and continue to believe that we have an adequate level of protection.

American Express has a great deal of experience working with airlines through all kinds of economic conditions, including bankruptcy. We have not had any significant losses from partners experiencing financial challenges. Our partnership with Delta continues to bring substantial value to both organizations, and we look forward to continuing our relationship.



An unexamined life isn't worth living.
User currently offlineCV580Freak From Bahrain, joined Jul 2005, 1033 posts, RR: 0
Reply 2, posted (8 years 11 months 3 weeks 2 days 1 hour ago) and read 2043 times:

That'll Do Nicely  Smile


One day you are the pigeon, the next the statue ...
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