Delta Air Lines suffers setback with lenders

Airline Industry Information, Nov 4, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

Delta Air Lines has suffered a setback in attempts to exchange its unsecured debt with its lenders after they agreed to only exchange enough to meet requirements for a small part of the debt.

The airline has offered to exchange USD2.6bn in unsecured debt for USD680m in secured notes with incentives for signing up early, but only USD252m in short-term securities has been tendered by lenders, just meeting the minimum requirements for the USD330m short-term debt exchange to pass.

The short-term debt however is the smallest part of the airline's USD2.6bn total debt and the medium- to long-term security tenders have not yet met the minimum requirements for an exchange to take place. Delta Air Lines said that if the long-term and medium-term tenders do not reach the required amount to pass by the 18 November 2004 deadline then it will use assets earmarked as collateral to meet liquidity needs, reports The Associated Press.

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