Delta Escapes Bankruptcy

Atlanta based Delta Airline, America’s leading carrier, came out of bankruptcy, as reported on Monday by the Delta Airlines officials. After 19 months of chapter 11 proceedings of bankruptcy, Delta Airlines finally emerged out of bankruptcy, which is a year earlier than expected.

"This is a great day in Delta's history -- a day that would not have been possible without the hard work and sacrifice of Delta people around the world," said Gerald Grinstein, Delta chairman and CEO.

He further added, "Through our restructuring we have successfully repaired our balance sheet, improved the customer experience, expanded our international route system and built a platform for future success. Delta is now a fierce competitor in a tough industry and we are confident that we will reclaim our rightful place as an industry leader."

Delta Airline will be using $2.5 billion exit financing facility to repay the company’s $2.1 billion debtor-in –possession credit facilities, which are led by American Express and GE Capital. After coming out of bankruptcy, Delta Airlines is experiencing lesser operating costs, diminished debt burden and above all, plans to improve revenue accumulation.

Delta Airlines came into bankruptcy chapter 11 back in September 2005, which was due to the effect of the increase in Gulf Fuel hurricanes. US Airways proposed a merger with Delta in December 2006, but had to withdraw its tender, because of inadequate favor from the Delta Airline’s creditors committee.

Delta Airlines, in order to revive its position and improve the face of its balance sheet has implemented elaborate operational changes to ensure an increase in profit of $3 billion by the year end 2007. These changes included the withdrawal of its pilot’s benefit pension plan, which reduced the company’s deficit of $3.4 billion.

Delta’s plans to improve its overall profile will be dependent on an operational strategy of lessening operating costs to its minimum and increasing its revenue generation tactics.

According to Delta’s outlook, expectations are of a stable and improved earnings, although, currently, Delta may not be able to show a swift raise in profits, but, there are certainly plans of revival in a positive manner. Delta will be able to improve its ratings if it is able to produce above average earnings and cash flow, which will put it in a position of rapid debt repayment and finance airplane deliveries by itself.