Delta Cleared to Exit Bankruptcy

Delta set to take off with its old stock ticker symbol restored and $2.5 billion in exit financing.
Stephen TaubApril 26, 2007

The U.S. Bankruptcy Court has cleared Delta to emerge from bankruptcy next week after it approved the carrier’s reorganization plan.

“This is an exciting day for everyone at Delta,” said Gerald Grinstein, Delta’s CEO, in a press release.

Some 360 million new shares in the airline will trade on the New York Stock Exchange under its old “DAL” symbol (the bankruptcy rendered the airline’s prebankruptcy shares worthless). According to the Associated Press, unsecured creditors will own between 62 percent and 78 percent of the value of their allowed claims as shares of new Delta stock. The airline will also be emerging from bankruptcy with $2.5 billion in exit financing. Earlier in the month, more than 95 percent of Delta’s creditors voted in favor of the plan.

Once its emerges from bankruptcy, there is some speculation Delta will sell Comair, its much-maligned regional carrier subsidiary, which has been criticized for lost baggage and flight delays, the Associated Press points out.

The wire service notes, however, that Grinstein said Wednesday not to expect any “immediate action” on Comair since the company has a new board of directors. The board will also need to find a successor for Grinstein, who at 74 plans to retire.

Delta filed for bankruptcy on Sept. 14, 2005, saddled by high fuel prices, surging labor costs and huge retirement benefits expenses.