Zone1
Topic Author
Posts: 894
Joined: Sun Jan 09, 2005 4:47 am

DL Seeking To Avoid UA Style Lease Fight

Sun Oct 08, 2006 4:56 am

Now with the bankruptcy starting to get toward the end, the hard issues are coming up. One of the main issues is the $4b DL has in aircraft lease claims. Companies that are owed money include Disney, Comcast, AT&T, Bear Sterns, and Bank of America. Delta is seeking to avoid the issues United had with these leases, which include repossession. Here is an interesting article on the issue:

http://biz.yahoo.com/ap/061006/delta_lease_claims.html?.v=1

It is odd that Disney is still claiming they own the MD-11s. I thought that was worked out a long time ago. One this is for sure, I think DL will have less leverage than UA did because DL needs all of its aircraft. United could play chicken with their lessors giving up planes to lessors that didn't want to accept UA's claims.
/// U N I T E D
 
worldtraveler
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Joined: Tue Aug 05, 2003 6:18 am

RE: DL Seeking To Avoid UA Style Lease Fight

Sun Oct 08, 2006 6:23 am

the issue is actually the tax benefits that are associated with those leases.

DL is trying to avoid months of individual lawsuits but the leasors aren't happy with the procedures DL is proposing.

There is really money at stake here but DL won't sink if they don't win every case.

If you notice, on many issues in BK, DL has compromised and settled for less than the lowest price in order to keep the BK process moving and to remain on decent terms with its creditors.
 
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kc135topboom
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Joined: Sun Jan 30, 2005 2:26 am

RE: DL Seeking To Avoid UA Style Lease Fight

Sun Oct 08, 2006 6:38 am

Quoting Zone1 (Thread starter):
It is odd that Disney is still claiming they own the MD-11s.

Perhaps they should repo the (now) MD-11Fs from UPS?

Quoting WorldTraveler (Reply 1):
the issue is actually the tax benefits that are associated with those leases.

DL is trying to avoid months of individual lawsuits but the leasors aren't happy with the procedures DL is proposing.

There is really money at stake here but DL won't sink if they don't win every case.

If you notice, on many issues in BK, DL has compromised and settled for less than the lowest price in order to keep the BK process moving and to remain on decent terms with its creditors.

In addition to the tax credits the lease companies get, they should also have a stake in helping DL exit bankruptcy. That is in everyones best interest. It sure seems DL has been doing what it can in just about every compromise. Do we know if DL has begun to set up the BK Exit financing, yet?
 
worldtraveler
Posts: 3417
Joined: Tue Aug 05, 2003 6:18 am

RE: DL Seeking To Avoid UA Style Lease Fight

Sun Oct 08, 2006 9:35 am

DL is finalizing its five year plan which it has to present to its creditors and if they approve then they will seek exit financing.

It is likely they will move fairly quickly through the process because the creditors have been very supportive of DL and have not disapproved any DL requests so far. They might not want to let DL order as many aircraft as has been speculated but DL said from the beginning of its BK that they intend to emerge in a position to acquire aircraft so they could grow.

DL has also said they want to have a signficant amount of equity financing instead of just debt in its reorganization.

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