Delta Air Lines Inc., Atlanta, today filed its reorganization plan with the U.S. Bankruptcy Court in New York. The airline intends to emerge from Chapter 11 bankruptcy protection in the spring of 2007.
The filing details Delta's five-year business plan, which projects that Delta will achieve significant increases in cash flow, operating margin and net income, according to a Delta news release. Under the plan, unsecured creditors will receive distributions of new Delta common stock to settle their claims. Current holders of Delta common stock will receive no distribution, and those securities will be canceled when the reorganization plan goes into effect. Creditors will now vote on the plan, which must also be approved by the court.
A separate hearing is scheduled Wednesday on an agreement between the airline and the PBGC that will allow termination of the airline's $1.7 billion Pilots Retirement Plan. The pension plan is underfunded by roughly $3 billion, of which the PBGC is responsible for roughly $913 million.
Delta also announced today that its board of directors unanimously rejected a hostile bid from US Airways, Tempe, Ariz., which was made public Nov. 15. The US Airways proposal "is structurally flawed and cannot be executed as claimed due to overwhelming antitrust and labor issues" and would erode the Delta brand, according to the release. "The board concluded that Delta's stand-alone plan will provide the company's creditors with superior value and greater certainty on a much faster timetable than the US Airways proposal."
