Delta shares slip as investors await tally on voting by pilots

0 Comments | Deseret News (Salt Lake City), Nov 11, 2004 | by Doug Gross Associated Press

ATLANTA -- Shares of Delta Air Lines Inc. slipped again Wednesday, as investors awaited the outcome of a labor vote that could determine whether the airline ends up in bankruptcy court.

Wall Street also reacted to an announcement that Delta would issue as many as 75 million new shares of common stock, mostly to pay employees as part of a new incentive program. The issue would dilute the value of the roughly 125 million shares currently outstanding.

Shares of Delta, which operates a hub at Salt Lake City International Airport, were down 17 cents, or 2.7 percent, to close at $6.08 Wednesday on the New York Stock Exchange. The shares, which dipped as low as $2.75 in September, have traded around $6 since late October, when the company reached a tentative deal with its pilot union after 15 months of negotiation.

The Atlanta-based airline's 7,000 pilots are expected to finish voting at noon today on that deal, which would slash their salaries by nearly a third. It calls for $1 billion in wage concessions from the pilots, who are currently among the highest-paid in the nation with salaries averaging between $100,000 and $300,000 a year.

Even if pilots approve the agreement, company officials have said they may still not be able to avoid bankruptcy. Delta still has to convince the holders of its $20.6 billion in debt to restructure the repayment terms.

Delta officials would not comment Wednesday on the pending union vote.

Union spokeswoman Karen Miller said results would not be tracked until voting is complete. She would not comment Wednesday on the number of pilots who had already voted or the mood among pilots contacting the union.

Delta has lost more than $6 billion since early 2001, during which time it has eliminated 16,000 jobs and cut the pay of other employees, including its executives. Last month, the airline reported a $651 million loss in the third-quarter.

The stock issue announced Wednesday was approved by the company's audit committee without shareholder permission under an emergency clause in the New York Stock Exchange rules. The committee said that waiting to get shareholder approval for the issue "would seriously jeopardize the financial viability of the company."

The airline also reiterated plans for significant cutbacks, including the elimination of up to 6,900 jobs during the next 18 months, another 10 percent, across-the-board pay reduction for non- pilots and a reduction in employee benefits.