Backer Offers to Ease Delta Finance Terms

One of Delta Air Lines' financial backers is offering to cut it a little slack, for a fee.

The airline said in a bankruptcy court filing that Merrill Lynch & Co. offered to improve pricing terms on a $300 million financing deal Delta is required to have in order to take credit card bookings.

Merrill Lynch also agreed to extend the financing deal by seven months, Delta said in court papers, according to a Bloomberg News report.

Delta hasn't decided whether to take the new deal with Merrill, which would require an undisclosed fee, the report said. The airline has asked its bankruptcy judge, Adlai Hardin, for permission should financial executives decide to do so.

The $300 million line of credit is used as a "holdback" reserve to protect credit card processors from losing money on refunds if Delta were to cancel substantial numbers of flights. Holdback requirements were among factors that tipped Delta into Chapter 11 protection last September as its financial condition worsened.

Delta's past two monthly reports have shown much narrower net losses and operating profits, leading executives to say the carrier's turnaround efforts are beginning to show results.

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