Delta OK’d for reorganization

Steve Tripoli Apr 17, 2007


SCOTT JAGOW: Looks like Delta will finally get out of bankruptcy at the end of this month. The airline’s been in Chapter 11 about 18 months. I’m sure Delta’s happy about this, but its creditors . . . maybe not so much. Then again, yesterday they approved the company’s reorganization plan. Steve Tripoli has more.

STEVE TRIPOLI: Delta’s emergence from bankruptcy protection gets it back to basics, says Bryson Monteleone of Morton Beyer & Agnew.

BRYSON MONTELEONE: For Delta, it means they can actually start to rebuild their airline. Perhaps focus on their product, be a little more competitive, start thinking about aircraft orders.

He says having one less U.S. carrier in bankruptcy also helps domestic airlines close the gap with global competitors.

But creditors didn’t emerge unscathed. The reorganization gives them between 62 and 78 percent of what they’re owed.

Monteleone says that shows that airlines remain a risky investment affected by many outside factors.

MONTELEONE: By cyclicality, by the weather, somebody having a bad day can cause an airline stock to drop — sometimes a pretty incredulous percentage.

Look what’s happened to industry star JetBlue lately. Delta’s new directors face the early chore of picking a new CEO. An outsider would be seen as a vote for a shake-up.

I’m Steve Tripoli for Marketplace.

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