Delta Air Lines
stock took off for a second session Thursday, notching more than an 8% gain on the back of Wednesday's 21% run-up.
Thursday's jump came after the nation's third-largest airline -- which has warned it could slide into bankruptcy if it can't restructure some $20 billion in debt and nail down labor concessions -- said it was extending a debt exchange until Nov. 18 and amending some of its terms.
The airline is offering up to $680 million of new senior secured notes to holders of $2.6 billion in outstanding unsecured debt securities. The new notes are backed by planes, flight simulators and flight training equipment with a current market value of $1.2 billion.
Shares of the volatile stock were up 32 cents to $4.12.
Recent gains in Delta shares likely were magnified by short-covering, said Suzanne Betts, an analyst at Argus Research. Investors wanting to make bearish bets on a stock borrow shares and then sell them short. When prices decline, these investors buy back shares and pocket the difference. But rising prices can send short-sellers scurrying to cover their positions, thus intensifying a rally. As of Sept. 8, 65.1 million Delta shares were sold short, accounting for more than half of the company's 125.6 million shares outstanding.
On Wednesday, Delta appeared to receive a lift from an early decline in oil prices that was later erased. It also appeared to benefit from investor hopes the airline would cut a deal on labor concessions with its pilots. The
reported Wednesday that negotiations were intensifying and noted the pilots union had delivered the company a new proposal on pay cuts. Karen Miller, a representative of the union, confirmed presentation of the new proposal, but declined to provide details. The airline is looking for $1 billion in pay cuts and other concessions.
The news came as the big carriers ranging from
prepare to roll out what is generally expected to be an ugly set of third-quarter results. The exceptions lie with the lower-cost carriers such as
, which earlier Thursday posted a
solid third-quarter profit.
Delta is due to post third-quarter results next Wednesday. The average Wall Street estimate is for a loss of $3.79 a share.