Delta Amends Credit Card Pact

Delta Air Lines (DAL) has amended its Visa and MasterCard credit card processing agreement so that a $1.1 billion holdback that was previously required has been eliminated.

The holdback consisted of an $800 million cash reserve and a $300 million letter of credit. Now, the entire cash reserve has been returned to Delta, and the letter of credit was terminated.

As a result of the changes, Delta expects to end the quarter with $4.2 billion in liquidity, including a $1 billion revolving line of credit.

Delta also said it should achieve operating margins of 11% to 12% for the June quarter, excluding certain items. The Atlanta-based airline affirmed its previous capacity guidance, saying domestic capacity will likely decline 4% to 6% from the year-ago quarter. International capacity, however, should rise 14% to 16%.

"Our plan remains on track, with our restructuring driving improvements to both unit revenues and unit costs,'' the company said in a press release Wednesday. "In this highly competitive industry, Delta is uniquely positioned in its ability to reallocate existing assets to right-size the domestic network and focus on international growth opportunities.''

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