Delta Air Lines Receives Court Approval for Aircraft Lease Transactions To Result in Approximately $200 Million of Annual Cost Savings
ATLANTA, Feb. 15, 2006 -- Delta Air Lines, Inc. today announced that the U.S. Bankruptcy Court for the Southern District of New York has granted approval for certain aircraft lease transactions that will result in approximately $200 million of annual savings for Delta compared with its existing rent and debt service obligations for those aircraft.
Edward H. Bastian, Executive Vice President and Chief Financial Officer of Delta, said: “Less than six months after filing for reorganization under Chapter 11, we have already made significant progress in our effort to achieve substantial annual cost reductions from the renegotiation or rejection of aircraft leases. Restructuring plans for over 90% of our mainline fleet and over a third of our regional jets have now been agreed to or otherwise implemented with aircraft financing parties.”
He continued, “The cost reductions resulting from these transactions are a critical element in our business plan, which calls for $3 billion in annual revenue and cost benefits. At the time of our Chapter 11 filing, we had targeted fleet savings of approximately $450 million. With the court approval received today, the Company is well on its way to achieving that objective. We are also on track to achieve our goal of eliminating four aircraft types from our fleet by the end of 2006.”
The transactions approved by Judge Adlai S. Hardin today, negotiated with a group of aircraft creditors, will restructure the financing arrangements for 88 aircraft in Delta’s mainline fleet. Closing of the transactions is subject to the completion of definitive documentation.
“We are very pleased that the parties involved in these negotiations were able to arrive at a consensual agreement on such a large group of aircraft so quickly,” Bastian said. “This agreement is an important milestone for Delta and a key cornerstone of our aircraft lease renegotiation efforts.”
Delta Air Lines is one of the world’s fastest growing international carriers with more than 50 new international routes added or announced in the last year. Delta offers daily flights to 503 destinations in 94 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. In summer 2006, Delta plans to offer customers more destinations and departures between the U.S., Europe, India and Israel than any global airline, including service on 11 new transatlantic routes from its Atlanta and New York-JFK hubs. Delta also is a major carrier to Mexico, South and Central America and the Caribbean, with more than 35 routes announced, added or applied to serve since January 1, 2005. Delta’s marketing alliances also allow customers to earn and redeem SkyMiles on more than 14,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. Customers can check in for flights, print boarding passes and check flight status at delta.com
Statements in this news release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the actions and decisions of our creditors and other third parties with interests in our Chapter 11 proceedings; our ability to obtain court approval with respect to motions in the Chapter 11 proceedings prosecuted from time to time; our ability to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 proceedings and to consummate all of the transactions contemplated by one or more such plans of reorganization or upon which consummation of such plans may be conditioned; risks associated with third
parties seeking and obtaining court approval to terminate or shorten the exclusivity period for us to propose and confirm one or more plans of reorganization, to appoint a Chapter 11 trustee or to convert the cases to Chapter 7 cases; our ability to obtain and maintain normal terms with vendors and service providers; our ability to maintain contracts that are critical to our operations; our ability to maintain adequate liquidity to fund and execute our business plan during the Chapter 11 proceedings and in the context of a plan of reorganization and thereafter; our ability to comply with financial covenants in our financing agreements; our ability to implement our business plan successfully; the cost of aircraft fuel; labor issues, including our ability to reduce our pilot labor costs to the level called for by our business plan and possible strikes or job actions by unionized employees; pension plan funding obligations; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in our operations; our ability to retain management and key employees; restructurings by competitors; the effects of terrorist attacks; and competitive conditions in the airline industry.
Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in Delta’s Securities and Exchange Commission filings, including its Form 10-Q, filed with the Commission on November 14, 2005.
The risks and uncertainties and the terms of any reorganization plan ultimately confirmed can affect the value of our various pre-petition liabilities, common stock and/or other securities. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these liabilities or securities.
A plan of reorganization could result in holders of our liabilities and/or securities receiving no value for their interests. Because of such possibilities, the value of these liabilities and/or securities is highly speculative. Accordingly, we urge that caution be exercised with respect to existing and future investments in any of these liabilities and/or securities. Investors and other interested parties can obtain information about Delta’s Chapter 11 filing on the Internet at delta.com/restructure. Court filings and claims information are available at deltadocket.com. Caution should be taken not to place undue reliance on Delta’s forward-looking statements, which represent Delta’s views only as of February 15, 2006, and which Delta has no current intention to update.
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- Delta Air Lines, Inc.
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