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Delta Air Lines seeks court OK of $21 million purchase of New York-to-London air route
By Caroline Salls
Pittsburgh, Aug. 2 - Delta Air Lines, Inc. requested court approval of a $21 million asset purchase agreement with United Air Lines, Inc. under which Delta will buy United's route authority to operate foreign air transportation between New York and London, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
According to the motion, as part of its ongoing restructuring efforts, Delta wants to garner a larger share of the profitable New York-to-London flight market, and purchasing the route from United will allow it to begin air transportation of persons, property and mail between New York and London under the certificate of public convenience and necessity issued by the United States Department of Transportation.
Under the purchase agreement, the total purchase price for the route will be up to $21 million.
Delta will make an initial $13 million payment if and when the DOT approves the transfer of the route and the other conditions to closing are satisfied.
The balance of the purchase price will be paid in four equal installments of $2 million in 2007, 2008, 2009 and 2010.
If, however, the DOT allows another U.S. carrier to begin service between New York and London, Delta will not be obligated to pay the remainder of the purchase price.
Delta said the agreement will allow it to enter the premier London/New York market with daily flights between John F. Kennedy International Airport and London s Gatwick Airport.
A hearing is scheduled for Aug. 22.
Delta, an Atlanta-based airline, filed for bankruptcy on Sept. 14, 2005. Its Chapter 11 case number is 05-17923.
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