ATLANTA, Oct. 6, 2005 (PRIMEZONE) -- Delta Air Lines (NYSE:DAL) today announced that the U.S. Bankruptcy Court for the Southern District of New York has granted final approval for the $2.2 billion in post-petition financing the company has arranged to help support its business during its Chapter 11 reorganization.
On Thursday, Judge Prudence C. Beatty granted final authority for Delta to utilize $1.9 billion in debtor-in-possession (DIP) financing provided to Delta by GE Commercial Finance and Morgan Stanley as co-lead arrangers. Pursuant to the court's interim approval in the first day orders on Sept. 16, 2005, Delta had already borrowed $1.4 billion under this facility. The total size of this credit facility was increased to $1.9 billion from $1.7 billion, and the interest rate on two of the term loans under this facility was reduced due to strong demand from participants in the loan syndicate.
The Court has also given final approval for Delta's secured post-petition financing provided by American Express. Delta borrowed the full $350 million of this facility pursuant to the Court's interim approval on Sept. 16, 2005. In connection with the borrowing of the balance of the $1.9 billion DIP facility, Delta will apply $50 million of the proceeds to pay down an equal amount of the American Express facility. As a result, Delta will have $2.2 billion of post-petition financing, an increase of approximately $1.22 billion from the pre-petition secured credit facilities.
"We are very pleased with the successful outcome of our efforts to obtain this level of post-petition financing," said Edward Bastian, Delta's chief financial officer. "Because of strong demand from financial institutions that wanted to participate in the DIP loan being arranged by GE Commercial Finance and Morgan Stanley, we were able to increase the size of that loan by $200 million and also reduce the interest rate we will pay on a substantial portion of this loan. We believe that our ability to achieve these significant improvements to the DIP credit facility and to secure the continued participation of American Express in the loan package indicates the confidence that investors have in our business plan and our ability to execute that plan. The financial demands on our company continue to be unrelenting -- including unprecedented and unpredictable fuel prices. We believe our new financing arrangements will be sufficient to support our business during the reorganization, but it will require a continued commitment across our organization to reducing costs and growing revenues."
At the hearing Thursday, Delta also received court authorization to assume the Delta Connection agreements between Delta and Atlantic Southeast Airlines (ASA) and SkyWest Airlines, which were entered into in September 2005 in connection with Delta's sale of ASA to SkyWest Inc. Upon entry of a final order approving the assumption of the Delta Connection agreements, Delta will be entitled to receive an additional $125 million from SkyWest, representing $95 million of the deferred purchase price and $30 million relating to certain aircraft financing deposits. Delta completed the sale of ASA to SkyWest on Sept. 7, 2005, at which time Delta received $350 million, consisting of $330 million of the purchase price and $20 million related to aircraft deposits. Under the Delta Connection agreements, ASA and SkyWest will continue to serve as Delta Connection regional carriers through 2020.
Delta and its subsidiaries filed to reorganize under Chapter 11 on Sept. 14, 2005, in the U.S. Bankruptcy Court for the Southern District of New York. The case number is 05-17923-PCB. More information about Delta's Chapter 11 reorganization is available on the Internet at delta.com/restructure. Information about the post-petition financing, as well as other court filings and legal information, is available online at deltadocket.com.
Delta Air Lines is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles 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.
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Statements in this news release that are not historical facts, including statements regarding Delta's 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, beliefs, expectations, 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 Delta's creditors and other third parties with interests in our Chapter 11 proceedings; our ability to obtain and maintain any necessary financing for operations and other purposes, whether debtor-in-possession financing or other financing; our ability to continue as a going concern; 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 the company 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; the potential adverse impact of the Chapter 11 proceedings on our liquidity or results of 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; the effect of a significant reserve or holdback under our credit card processing agreements; our ability to comply with financial covenants in our financing agreements; our debt and pension plan funding obligations; the cost of aircraft fuel; pilot early retirements; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in our operations; labor issues; 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 Aug. 15, 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 constituencies. 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. Caution should be taken not to place undue reliance on Delta's forward-looking statements, which represent Delta's views only as of Oct. 6, 2005, and which Delta has no current intention to update.