Judge OKs Delta Air Lines Chapter 11 exit plan; airline to leave court protection next week

NEW YORK — A federal bankruptcy judge approved on Wednesday a Delta Air Lines plan to exit bankruptcy after the nation's third-largest airline spent nearly 20 months in a wrenching reorganization that cut 6,000 jobs and slashed $3 billion in costs.

Atlanta-based Delta Air Lines Inc. expects to emerge from court protection Monday. It estimates it will be worth $9.4 billion to $12 billion, after Delta reduced labor costs, restructured its fleet and terminated a pilots pension plan.

More than 95 percent of creditors voted to endorse the plan for Delta to leave bankruptcy as a stand alone carrier. That plan had been put in jeopardy by a $9.8 billion hostile takeover bid launched last fall by Tempe, Ariz.-based US Airways Group Inc. Delta successfully persuaded creditors to back its blueprint to emerge from bankruptcy and reject the buyout offer.

Now that it is leaving court protection, Delta may sell off its regional carrier subsidiary, Erlanger, Ky.-based Comair, which has received poor marks for lost baggage and flight delays.

Grinstein said Wednesday not to expect any "immediate action" on Comair since the company has a new board of directors.

Delta's board will also choose a successor to Chief Executive Gerald Grinstein, who plans to retire. Grinstein, who is 74, has said the two leading internal candidates are Chief Financial Officer Ed Bastian and Chief Operating Officer James Whitehurst.

Delta will celebrate its emergence Monday in Atlanta. Shares in the reorganized Delta, with the ticker symbol DAL, are scheduled to begin trading again next Wednesday on the New York Stock Exchange.

"I feel elated," Grinstein said after the hearing. "For the 47,000 (employees) ... they're the ones who went through all the angst and made the sacrifices. It's for them I feel extreme relief."

Delta's reorganization plan will give unsecured creditors between 62 percent and 78 percent of the value of their allowed claims as shares of new Delta stock.

The company's existing stock, which will be worthless, continued to trade until the court's approval of the plan. The shares fell 3.5 cents, or 21.2 percent, Wednesday to 13 cents.

Since January 2001, the company has lost a total of more than $18 billion. In recent months, though, Delta's financial situation has improved, with the company projecting a 2007 pretax profit of $816 million, excluding special charges and reorganization costs.