|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads |  |
JUNE 21, 2004
Delta Is Ready When The Pilots Sign 
Delta Air Lines (DAL
), the third-largest U.S. carrier in terms of operating revenues and passenger miles, is way down on the Street's favored list. Delta faces a risk of bankruptcy, analysts say. Huge debt and soaring costs for fuel and labor -- especially the high salaries of its pilots -- have put Delta in a bind.
Nonetheless, some savvy investors have been buying shares, which have dived from 15 on Sept. 8 to 6 on June 9. Among them is Vince Carrino, president of Brookhaven Capital Management. He thinks Delta is "very close to a deal, with the pilots agreeing to a 30% pay cut in exchange for owning a 30% equity stake in the airline." The pilots have no choice, with bankruptcy as the only other option, he adds. People close to the situation, says Carrino, expect Delta will ink a pact with the pilots by the end of July. The pay cut could amount to savings of about $1 billion a year, says Carrino. Delta, he adds, aims to save an additional $500 million from debt restructuring and cost-cutting elsewhere. That, he says, plus a drop in oil prices should reenergize the stock, which Carrino figures will double in a year. Gary Chase of Lehman Brothers (LEH ), who recently upgraded the stock from "equal weight" to "overweight," says Delta could be in bankruptcy court if it fails to win the pilots. A deal would open capital markets to Delta again. Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.  By Gene G. Marcial
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version
