Delta fate up to creditors

ATLANTA — The unsecured creditors committee in Delta Air Lines' bankruptcy case, which holds a key role in deciding the carrier's fate, said Wednesday it supports Delta's decision to file its stand-alone reorganization plan, but that it also will weigh alternatives.

Also on Wednesday, the government's pension insurer gave its final approval Wednesday for a plan to terminate the pensions of Delta Air Lines pilots, a key step for the carrier to resolve a multibillion-dollar issue in its bankruptcy case.

The creditors committee had been largely silent since US Airways' unsolicited $8.4 billion bid for Delta that was disclosed on Nov. 15.

"A number of issues, including those left open in the plan of reorganization, will be the focus of continuing discussions between the committee and Delta over the coming weeks," the committee said in a statement. "At the same time, the committee will continue to consider potential alternatives in order to maximize the ultimate recoveries for the unsecured creditors in the Delta bankruptcy."

The committee did not elaborate on its views, and a lawyer for the committee, Daniel Golden, did not return repeated calls and e-mails seeking comment.

Delta says in its plan that after bankruptcy it will be worth as much as $12 billion. Its unwelcome suitor, US Airways, says Delta's value is what it is offering to buy it for. Creditors must decide which proposal makes the most sense.

Analysts differed Wednesday on whether Delta's valuation, which it announced in its reorganization plan a day earlier, is realistic in light of high fuel prices, the slowing economy and the airline industry's history in recent years of bad financial news.

Some believe it's likely US Airways will raise its offer, while other analysts aren't sure it's necessary right now. One thing most agree on: Delta has made clear its desire to remain independent.

Approval of the pilot pension plan means the Pension Benefit Guaranty Corp. would take over the pensions and pay pilots a portion of the benefits they had expected to receive from the company.

In return, the plan gives the pension agency an unsecured claim of $2.2 billion against the nation's third biggest carrier. Holders of unsecured claims usually receive a fraction of their total claim.

"This may be the single most important settlement in the entire case," said Marshall Huebner, attorney for Delta Air Lines Inc. The PBGC estimated the pilot pensions were underfunded by about $3 billion, according to a court filing.

U.S. Bankruptcy Judge Adlai Hardin also approved the final settlement. He said it was "a vital stepping stone" on the path to a successful reorganization.

The plan had one objector, a retired pilot, but received support from the major stakeholders in the case, including the creditors committee, a group of retired pilots and the union that represents working pilots. Hardin said those parties saw that "it is not only a good settlement, it is an absolutely essential settlement for the company to move forward and for the benefit of the pilots."

The Atlanta-based airline has said it needs to end the pilot pension plan in order to successfully restructure and emerge from bankruptcy court protection as a stand-alone company in the spring of next year

The pension termination plan also calls for the PBGC to get $225 million in senior unsecured notes, which could be convertible to cash once the airline exits bankruptcy.

The agreement between Delta and the pension agency is effective retroactive to Sept. 2 and affects about 13,000 current and former pilots and their beneficiaries.