A US bankruptcy court today gave Delta Air Lines the go-ahead to exit bankruptcy at the end of this month.
"We're free at last," said Delta chief executive Gerald Grinstein. "I feel elated." Delta, the third largest US airline, emerges as a leaner carrier after cutting capacity and about $1 billion in labour costs.
While the US airline industry turned a profit last year for the first time since before the September 11th, 2001 attacks, Delta will emerge from reorganisation amid signs of softening demand.
A number of US airlines, including Southwest Airlines and JetBlue Airways, have recently complained of sluggish bookings ahead of the busy summer travel season.
But Delta said earlier this week it believes its expansion into lucrative international markets and lower costs will help it weather a downturn. It has forecast a pretax profit, before special items, of $816 million this year, after a loss of $452 million in 2006.
As part of its emergence from bankruptcy, Delta plans to issue new shares to its creditors. It plans to list those shares on the New York Stock Exchange on May 3rd under the symbol "DAL". Old Delta shares will consequently be cancelled and therefore worthless.
Since filing for Chapter 11 in September 2005, Delta has slashed labour costs, reduced capacity in the hard-fought domestic US market, and boosted service to markets in Latin America and the Middle East, as part of $3 billion turnaround plan.
The company was pushed into bankruptcy after racking up nearly $19 billion in debt and accumulating $7.5 billion in losses between 2001 and 2005 amid high costs and low-fare competition.