Delta Air Lines
appears to have given up on part of a debt exchange that is part of its restructuring plan.
In its quarterly filing with
Securities and Exchange Commission
, the struggling airline said it has received so few tenders for the intermediate and long-term parts of the exchange that it expects those swaps will be unsuccessful. Delta had been hoping to exchange $2.32 billion worth of notes in those maturities for smaller amounts of new secured notes. The airline will now seek to use collateral it had reserved for those securities to secure other financing. The exchange is due to end Thursday.
The company previously had hinted that the intermediate and long-term portions of the exchange weren't going well, but had not stated so explicitly. The airline's short-term debt exchange is faring better, with $252 million tendered so far -- enough to meet exchange conditions.
The nation's third-largest airline has struggled as sky-high fuel prices have driven up expenses, and as a glut of capacity and tough price competition have made it tough to raise fares. Delta is scrambling to put into place various pieces of a restructuring program designed to stave off a Chapter 11 bankruptcy filing.
As part of its efforts to shore up liquidity, Delta has secured commitments on $1 billion in new financing from
, while holders of $135 million of debt due next year have agreed to a defer it.
Nevertheless, Delta warned in its 10-Q that if it can't complete the Amex or GE financings or satisfy future liquidity needs, it would need to seek Chapter 11 bankruptcy protection. Delta's management has repeatedly warned of such a fate if the airline cannot secure sufficient cost savings or shore up liquidity.
And even if Delta obtains the American Express and GE financing and debt deferrals, it will still need to defer an additional $175 million of debt maturing next year, secure $130 million to $150 million of new financing using collateral originally reserved for the debt exchange, and secure an additional $85 million of liquidity early next year, the filing said.
Delta shares finished Monday's session up 66 cents, or 9.7%, at $7.50.