ATLANTA, United States (AFP) - Delta Air Lines, racing to avoid bankruptcy, said it had secured highly conditional, asset-backed financing of a maximum 600 million dollars from American Express.
Up to 100 million dollars would be the form of a loan, part of a new credit facility still being negotiated with other lenders, the Atlanta, Georgia-based airline said in a statement.
The remaining 500 million dollars would be in the form of a pre-payment for Delta Skymiles to be credited to American Express, subject to "substantial conditions," it said.
"As our September quarter 2004 losses demonstrate, time is now very critical for Delta," Delta chief executive Gerald Grinstein said in statement,
"American Express' role in Delta's transformation process demonstrates the commitment and determination of one of our key stakeholders in helping to restructure the company."
Both the credit facility and the prepayment facility would be fully collateralized by a pool of assets, Delta said.
Delta Air Lines had 1.45 billion dollars in unrestricted cash as of September 30.
Last week, the airline said net losses mushroomed to 646 million dollars, or 5.16 dollars a share, in the three months to September 30, compared to a year-earlier loss of 164 million dollars, or 1.36 dollars a share.
Sales rose 5.9 percent to 3.87 billion dollars.
New York-based credit rating agency Standard and Poor's said last week Delta was facing an imminent decision on bankruptcy.
"Given Delta's heavy losses and dwindling liquidity, the company will likely have to decide whether to seek bankruptcy protection within weeks," said Standard and Poor's analyst Philip Baggaley.
"To avoid bankruptcy, Delta must quickly secure a concessionary agreement with its pilots and very likely must also complete a public bond exchange offer that was amended and extended October 14, 2004," Standard and Poor's said.
Delta's credit rating -- cut to CC-negative last month, meaning it is highly vulnerable to default -- was affirmed.
10/25/2004 - 19:29 GMT - AFP