Delta Air Lines'

(DAL) - Get Report

shares jumped 25.6% Wednesday after CEO Gerald Grinstein presented a long-awaited restructuring plan to the company's board of directors, while working with creditors to avoid a bankruptcy filing.

After sliding to a low unseen in more than 25 years, Delta shares rose 56 cents to $4.15 on a combination of short-covering and optimism that the company can avoid Chapter 11. Over the last month, shares have dropped 50%, and traders have begun buying short options, betting the company will continue to fall.

The nation's third-largest airline is looking for $1 billion in wage concessions from unionized pilots, who countered in late July with a package that included $700 million in concessions. Currently, the two sides have no plans to meet to negotiate, but the restructuring plan will likely end this impasse and clear the way for much-needed conversations to try and save the airline.

While details of the restructuring plan have not been made public, the Air Line Pilots Association representing Delta's pilots appears likely to get an equity stake in the company in exchange for deeper cuts. In a message to employees last week, the union said it was "waiting for management to provide the union with a complete proposal that addresses equity issues. At that time, ALPA will be prepared to engage in constructive negotiations in the context of overall restructuring."

Analysts covering the company say Delta's master plan will emphasize operational efficiency, while eliminating short-haul routes and downsizing smaller hubs that don't drive traffic or revenue. Furthermore, Delta may seek to differentiate itself from the competition by offering a higher standard of service and nixing Song, its year-old low-cost unit, which was specifically designed to compete with

JetBlue Airways

(JBLU) - Get Report


AirTran Airways



"Details are slowly emerging with respect to Delta's new business plan," wrote Susan Donofrio, analyst at Fulcrum Global Partners, in a research note. "This involves playing to Delta's strengths by service improvements and focusing in on longer-haul and international flights. In addition, it appears that Song could be on the chopping block." (Fulcrum Global Partners does and seeks to do business covered with the companies covered in its research reports.)

Delta also announced that it has begun a consent solicitation to certain debtholders, specifically the ones holding equipment trust certificates used to back airplane leases. The carrier wants debtholders to agree to remove restrictions governing the amount of debt Delta is allowed to buy, giving it more flexibility to restructure outside of the court.