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Delta CEO Fears Plan Won't Save Airline

Posted on: Sunday, 31 July 2005, 12:00 CDT

Delta Air Lines Inc.'s current transformation plan is not enough to save the struggling carrier, CEO Gerald Grinstein said in a memo to employees that addressed renewed concerns about bankruptcy.

Grinstein said in Tuesday's memo that the nation's third-largest airline is still working hard to avoid a Chapter 11 filing. But he reiterated that there are risks affecting Delta's ability to do that, even though the plan includes cutting annual costs by $5 billion by the end of next year.

"In light of what we have accomplished together so far, there can be no doubt that Delta's transformation plan is delivering results," Grinstein said. "What is also clear is that is not enough."

Grinstein, citing the impact of high fuel prices and the interest expense on the company's massive debt, said Delta plans to expand its initiatives to cut costs, improve efficiencies and raise cash.

"We have been candid about the risk that a number of factors, some of which are beyond our control, will affect our ability to avoid a Chapter 11 filing," Grinstein told employees. "However, we are still working to pursue an out-of-court solution."

Shares of Atlanta-based Delta fell 44 cents, or 13 percent, to close at $2.95 Wednesday on the New York Stock Exchange.

Last week, the airline reported a $388 million second-quarter loss.

Source: Tulsa World

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