Delta is granted final approval of post-petition financing

Airline Industry Information, Oct 7, 2005

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Delta Air Lines (NYSE:DAL) has been granted final approval by the US Bankruptcy Court for the Southern District of New York for its USD2.2bn in post-petition financing.

The airline has reportedly arranged the financing to help support its business during its Chapter 11 reorganisation. Judge Prudence C Beatty granted final authority for Delta to utilise USD1.9bn in debtor-in-possession (DIP) financing provided by GE Commercial Finance and Morgan Stanley as co-lead arrangers.

The court has also given final approval for Delta's secured post-petition financing provided by American Express. Delta said that it borrowed the full USD350m of this facility pursuant to the court's interim approval on 16 September 2005. In connection with the borrowing of the balance of the USD1.9bn DIP facility, Delta will apply USD50m of the proceeds to pay down an equal amount of the American Express facility. As a result Delta will have USD2.2bn of post-petition financing, which is an increase of about USD1.22bn from the pre-petition secured credit facilities.

Additionally, Delta has also received court authorisation to assume the Delta Connection agreements between Delta and Atlantic Southeast Airlines and SkyWest Airlines, which were entered into in September 2005 in connection with Delta's sale of Atlantic Southeast Airlines to SkyWest Inc.

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