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Auditor Doubts Delta's Fiscal Viability

September 16, 2004|From Reuters

Delta Air Lines Inc. said Wednesday that its auditor had expressed doubt about the airline's financial viability.

In a regulatory filing with the Securities and Exchange Commission to update its 2003 annual report, the airline said Deloitte & Touche raised significant questions about Delta's ability to continue as a going concern.

A Delta spokesman said he could not discuss the matter beyond what was included in the late-day disclosure.

The nation's third-biggest airline said this week that it was meeting with bankruptcy lawyers in the event of a decision to seek Chapter 11 protection.

Delta has warned it may have to restructure in court this year if it fails to strike a concession deal worth $1 billion with its pilots.

The pilots, represented by the Air Line Pilots Assn., are the only unionized employee group at the Atlanta-based carrier.

The union's executive committee ordered its negotiators this week to address the possible retirement of a large number of pilots because of fears over bankruptcy and the possibility of pension troubles if they stay on.

Delta also unveiled plans last week to cut as many as 7,000 jobs.

Separately Wednesday, Delta launched a debt restructuring offer to investors. The plan calls for exchanging as much as $680 million in newly issued senior secured notes, which will be backed by aircraft and other assets worth $1.3 billion.

Delta shares fell more than 6% to $3.85 in after-hours trading, down from $4.10 in regular trading on the New York Stock Exchange.

Hundreds of pilots have left the company in recent months, and more retirements could force the company to ground flights and accelerate its financial slide.

Most major airlines have been stung by weak revenues and high fuel prices.

US Airways Group Inc. filed for bankruptcy protection Sunday for the second time in two years.

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