Delta's Bankruptcy Costs Mount

The employees at Giuliani Capital Advisors have put in a lot of hours working on Delta Air Lines' bankruptcy.

Eight of the Wall Street firm's employees billed the carrier for 5,955.7 hours during the first 21 weeks of the Atlanta airline's Chapter 11 case. The firm, former New York Mayor Rudolph Giuliani's boutique investment banking company, said one associate worked 988 hours. That works out to an average of seven-plus hours a day, including Saturdays, Sundays, Thanksgiving, Christmas and New Year's.

Add in a couple of dozen hours billed by a few other employees and $55,776 in hotel bills, airfare and other expenses, and you're getting to some real money: $1,855,776.

That total was among $41.4 million in fees and expenses that U.S. Bankruptcy Judge Adlai Hardin approved this week to be paid to lawyers and other professionals for the first half of Delta's 8 1/2-month-old Chapter 11 case.

That's enough money to pay the annual salaries of 1,165 of Delta senior flight attendants or about 700 senior mechanics.

Still, it's only a drop in the bucket compared with what Delta may eventually pay out to an army of lawyers, investment bankers and other professionals if its restructuring drags on like United Airlines' did. United paid out more than $300 million on such fees over three years before emerging from Chapter 11 earlier this year.

Delta spokeswoman Gina Laughlin said the airline's professional and legal expenses are "commensurate with large and complex bankruptcy cases." She said Delta's advisers helped the carrier make "a lot of progress in those months," such as securing loans to finance its restructuring.

Delta executives hope to get the No. 3 carrier out of bankruptcy by mid-2007.

Delta has been paying Giuliani Capital Advisors $400,000 a month, plus expenses, to help with tasks such as forecasting cash levels and advising the carrier on how much money other bankrupt airlines have spent on professional fees.

But the top law firms handling Delta's overall case and legal dealings with its pilots union and aircraft lessors and lenders have collected far larger billings. The court approved $10.9 million in payments to Delta's lead law firm, Davis Polk & Wardwell.

The compensation approved Monday excludes another $2.04 million requested by other firms and $195,000 the judge has held back from the airline's auditor, Deloitte & Touche LLP, The Associated Press reported.

Also on Monday, Hardin denied a request by Delta's bankruptcy trustee that an independent financial adviser be appointed to review Delta's legal and professional expenses. The trustee argued that Delta had been charged more than $43 million in legal and professional fees in just four months, with little time to review expenses in the heat of its restructuring.

However, the judge said hiring an independent examiner to review the bills would violate attorney-client privilege and boost Delta's bankruptcy expenses, the AP reported.

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