Delta Air Lines Inc. asked a New York bankruptcy court judge Monday to approve its renegotiation of 88 airplane leases, a move that will save it about $200 million a year.
Delta's request, initially opposed by a committee representing unsecured creditors, will likely be approved Wednesday by Judge Adlai Hardin who is overseeing Delta's bankruptcy.
Attorneys for Delta said Monday they will return to court with a revised set of renegotiated leases on Wednesday. Some of the alterations to the leases involve changes to how Delta can terminate the leases and a reduction in monthly rents paid on Boeing 767-300 models.
"Less than six months after filing for restructuring under Chapter 11, Delta has already made significant progress in its effort to achieve substantial annual cost reductions from the renegotiation or rejection of aircraft leases," said Michael Freitag, spokesman for Delta. "These cost reductions are a critical element in Delta's restructuring plan, which calls for $3 billion in annual revenue and cost benefits."
Delta, like other carriers, leases many of the planes in its fleet of 682 aircraft. The planes are owned by special financial institutions.
The Atlanta-based carrier, which filed for bankruptcy protection in September, sought to renegotiate leases on the 88 planes to cut costs. The craft include MD-88, Boeing 757-232, Boeing 767-332 and Boeing 767-332ER models.
While Delta would not comment specifically on why it chose to renegotiate rent payments on the planes with a group of the owners instead of individually, it may save the carrier time.
The airline's committee of unsecured creditors had argued the leaseholders -- by working as a group in their negotiations with Delta -- may have been in violation of anti-trust regulations. The committee dropped their objection to how the leases were renegotiated and said Monday it would not sue the lease holders.
Delta had already waived its right to sue the leaseholders for any potential anti-trust violations when it first entered into an agreement with them. It reaffirmed Monday it will not sue the leaseholders for any possible anti-trust issues.
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