Delta Wins OK for Lower Interest Rate

Delta Air Lines Inc. said Monday that it has won approval for a lower interest rate from lenders of its $1.9 billion debtor-in-possession financing, saving the company $30 million a year.

The loans are designed to allow Delta to meet its business expenses while it is under Chapter 11 bankruptcy protection. Delta, which operates the nation's third-largest airline, filed for Chapter 11 bankruptcy protection in September.

Delta officials said the arrangement also will result in a lower interest in its post-petition financing from American Express Travel Related Services Co.

Edward H. Bastian, Delta's chief financial officer, said the agreement also will provide more flexibility on the carrier's fuel hedging program.

"We will continue to aggressively pursue opportunities to reduce costs as we work to achieve the $3 billion annual cost savings and revenue enhancements of our business plan," Bastian said.

Delta's plan for restructuring calls for up to $325 million in long-term pay and benefit reductions for the pilots. Management has agreed to lower that to $305 million if the pilots union reaches an accord with the company. The union's plan for cost savings is valued at $140 million.

Last week, the head of a federal arbitration panel instructed the management and pilots union to negotiate an agreement to avoid a collapse of the 77-year-old airline.

The union has said pilots will strike if Delta is allowed to void the contract. Company executives say a strike would force Delta out of business.

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