Delta Air Lines Plans to Emerge From Bankruptcy in April
{{#rendered}} {{/rendered}}Delta Air Lines Inc. expects to emerge from bankruptcy April 30 with an eye on returning to profitability, improving customer service and selling more assets to build shareholder value, the company said Tuesday.
The nation's third biggest carrier did not say in documents prepared for an investor conference what assets it plans to sell. The documents were filed with theSecurities and Exchange Commission.
Atlanta-based Delta addressed its future business plan at Tuesday's conference.
{{#rendered}} {{/rendered}}The filing suggested Delta slightly moved up the date of its planned emergence from Chapter 11. It had said in a statement March 20 it expected to emerge from bankruptcy in early May. It sought protection from creditors in September 2005.
Delta is expected to announce later this week who will serve on its post-bankruptcy board of directors. The board will pick a new chief executive officer to replace Gerald Grinstein, who has said he plans to step down sometime after Delta exits Chapter 11.
Grinstein told investors at the conference that he hopes the new 11-member board is announced by Friday. He said the official committee of unsecured creditors in Delta's bankruptcy case will choose the board. At least three board members will be current board members. Grinstein said he would stay on the board until his successor as CEO is named.
{{#rendered}} {{/rendered}}He said his strong preference for a successor is an internal candidate. Chief Financial Officer Ed Bastian and Chief Operating Officer James Whitehurst are considered by many to be leading internal candidates for the top job.
"My persuasive powers will be brought to bear to see if we can make an internal selection and do it quickly," Grinstein said. "At that point, my role has ended."
Grinstein also addressed questions about industry consolidation and where Delta factors in.
{{#rendered}} {{/rendered}}Grinstein said he doesn't think it is the right time for major airlines to merge.
"I do think that is going to be deferred for several years, three or four years," said Grinstein, whose company earlier this year successfully fought off a hostile bid by Tempe, Ariz.-based US Airways Group Inc. to buy Delta. "Do I think six network carriers are too many? No, I don't."
As for Delta and its role in possible consolidation, Grinstein said, "Frankly, I see its future more as an acquirer rather than being acquired."
{{#rendered}} {{/rendered}}Grinstein said it's not out of the question that a major carrier could buy a low-cost carrier.
Grinstein said his opinion about consolidation among major carriers could change if another carrier makes a move.
"If another merger were to take place, it would have a significant forcing impact on Delta, and Delta would have to look at its options," Grinstein said.
{{#rendered}} {{/rendered}}But he said putting big airlines together is easier said than done — especially blending the cultures of different companies.
"You have to really look at whether you want to take that on, and I have a high degree of skepticism," Grinstein said.
Delta said its objectives for this year, in addition to exiting bankruptcy, include achieving the financial commitments in its transformation plan, boosting margins and building cash for long-term strength.
{{#rendered}} {{/rendered}}It will continue to expand its international service, with a special focus on its service from New York City's John F. Kennedy International Airport.
Delta said in the investor documents it also wants to improve baggage handling, streamline and enhance customer service and improve the operational performance of the feeder carriers that service its Delta Connection flights.
Good morale among employees will be key to the customer service initiatives, Grinstein said.
{{#rendered}} {{/rendered}}"Delta has traditionally had that. It wavered for a bit, but for a variety of reasons I think it is coming on strong," Grinstein said.
The company's plan to "unlock shareholder value" includes building on its maintenance repair and overhaul business and "further monetization of assets," a phrase that refers to the sale of assets.
Delta has not said what its future plans are for subsidiary Comair Inc., the Erlanger, Ky.-based regional carrier that provides connecting service for the airline.
{{#rendered}} {{/rendered}}Delta has spent the last two years cutting costs, restructuring its business and working to increase revenue.
"This company is not going to look the same coming out of bankruptcy as it did going in," Grinstein told investors.