Banker testifies that Delta can emerge from bankruptcy
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A Wall Street investment banker testified Monday that Delta Air Lines will be able to emerge from bankruptcy if it follows a plan to slash $3 billion in costs that includes a hotly debated $325 million cut in pilot wages. Asked by Judge Prudence Carter Beatty if the bankrupt carrier’s management was capable of bringing the airline out of bankruptcy successfully, Timothy Coleman, an investment banker with The Blackstone Group which is advising Delta, said “yes.” But Beatty cautioned the court and Coleman that the bankruptcy has “a lot of different pieces to this puzzle. It seems to me that the structure of the plan has to be nicely done.” Coleman said the management team and others involved in the bankruptcy “are extremely smart.” “I think we have got the right parties in place,” Coleman said on Monday, the seventh day of hearings focused on the carrier’s request to do away with its collective bargaining agreement. Beatty said the banker’s testimony had satisfied her questions about the airline’s ability to move ahead toward a successful reorganization. Beatty repeated to the airline and its pilots that they should keep trying to find a middle ground. “I believe the parties — the union and debtor — know how to negotiate union contracts,” she said. The prior six days of hearings have focused on the airline’s arguments for why it needs the pilots to agree to wage cuts, including testimony from Delta’s chief financial officer Edward Bastian and Coleman. On Tuesday, Delta’s chief labor relations executive, Geraldine Carolan, is expected to testify about labor negotiations with the pilots union. This testimony and the cross examination are expected to last more than a day. Last week, Delta said it lost $1.14 billion, or $6.04 a share, in the first six weeks since filing for bankruptcy on Sept. 14. The airline also said that it spent $2.61 billion in the first six weeks of its bankruptcy case, much of it on fuel, salaries and interest expense. It listed $17 million for “professional fees” associated with its bankruptcy case during the period and included that amount in the reorganization items it said contributed to its loss in the period. |