"Delta stock tumbles after rating downgrades"

Wednesday, September 14, 2005

Delta Shares Fall More After Downgrades 
By HARRY R. WEBER 
The Associated Press


ATLANTA - Shares of Delta Air Lines Inc. fell further below $1 a share
Tuesday after several ratings downgrades and an analyst's assertion that the
nation's third-largest carrier will shrink if it files for bankruptcy, as
expected.

JP Morgan airline analyst Jamie Baker estimated in a research note that
Atlanta-based Delta will reduce capacity by 15 percent from current levels,
similar to the shrinkage of the two other major airlines in bankruptcy,
United and US Airways.

The comments came as Delta prepares to file for bankruptcy. An industry
consultant who has been informed of the company's plans told The Associated
Press on Monday that the filing was expected to come Wednesday afternoon,
but could be pushed to Thursday depending on when Delta secures roughly $2
billion in debtor-in-possession financing it is seeking.

Delta shares fell 7 cents, or 8.2 percent, to close at 78 cents in trading
Tuesday on the New York Stock Exchange.

Baker said the bankruptcy filing would come as no surprise for Delta, which
has racked up nearly $10 billion in losses since January 2001. In
downgrading his rating on Delta to underweight from overweight, Baker said
he believes Delta will continue to retire, sell or swap certain aircraft
types as it simplifies its fleet.

"While it may ultimately be reported that Katrina knocked Delta from the
sky, management's apparent inability to vigorously pursue asset sales,
debt-for-equity exchanges, credit card processor replacement, wage
reductions, and all-around liquidity raising in light of dramatically higher
fuel prices rank among the primary reasons for our updated outlook," Baker
wrote in his research note.

Hurricane Katrina hit Delta hard because of the airline's presence in the
South. It had canceled commercial flights to New Orleans and Gulfport,
Miss., since the hurricane hit Aug. 29.

Delta said Tuesday that it has resumed commercial flights to New Orleans. It
operated one flight there on Tuesday and plans more on Wednesday and
Thursday. Its partner carrier, Atlantic Southeast Airlines, which it
recently sold to SkyWest Inc., resumed flights to Gulfport on Saturday, but
mainline Delta doesn't plan to resume service to Gulfport until Sept. 20.

Delta has not said how much it has lost because of the hurricane.

Besides the JP Morgan downgrade, Moody's Investors Service late Monday
lowered certain debt ratings that apply to Delta. The bond rating agency
cited as a reason the increasing likelihood that Delta will need to
reorganize its obligations, either in or out of bankruptcy, because of its
difficult operating environment.

Meanwhile, Delta is seeking a new round of concessions from its pilots. The
pilots union said in a memo to its members that at a meeting with management
Monday, the company presented the union with a "comprehensive, deeply
concessionary contract proposal." The memo did not put a dollar amount on
the concessions that Delta is seeking. A union spokeswoman said Tuesday that
the union's executive committee will discuss the proposal at meetings
starting Monday.

Delta is expected to pledge its few remaining unencumbered assets as part of
the bankruptcy financing agreement it is seeking with creditors, including
GE Commercial Finance. Most of the airline's other assets are already
pledged as collateral for loans.

Delta has declined to comment on the bankruptcy reports.

The filing would make Delta the third major U.S. carrier to enter Chapter 11
since the 2001 terrorist attacks, joining Elk Grove Village, Ill.-based UAL
Corp., parent of United Airlines, and Arlington, Va.-based US Airways Group
Inc., which has filed twice in the last three years.

Some smaller carriers, including Honolulu-based Hawaiian Airlines and
Indianapolis-based ATA Airlines Inc., also have filed for bankruptcy in
recent years.

Attached Photo:

Delta Air Lines service vehicles, taxing, landing and parked aircraft
compete for tarmac space at the airlines main hub, Hartsfield Jackson
Atlanta International Airport in Atlanta on Monday, Sept. 12, 2005. Delta
Air Lines Inc., the nation's third-largest carrier, plans to file for
bankruptcy protection in New York as early as Wednesday, according to an
industry consultant who has been informed of the company's plans. The
consultant, who was not authorized to disclose the information and thus
spoke on condition of anonymity, said Delta is working with GE Commercial
Finance and other creditors to arrange roughly $2 billion in
debtor-in-possession financing. The money would allow the airline to operate
in bankruptcy.

On the Net:

Delta Air Lines Inc.: http://www.delta.com

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