Delta rises with March traffic results; Hawaiian Telcom slide progresses; Idearc bid dips on downgrade

By Sara Rosenberg

New York, April 3 - Delta Air Lines Inc.'s bank debt headed higher during Thursday's market hours as the company reported an increase in March traffic, and Hawaiian Telcom Communications Inc.'s term loan inched lower as some selling pressure was seen in the name.

In other trading news, Idearc Inc.'s term loan was bid lower on the heels of a ratings downgrade and Rite Aid Corp.'s term loan stayed firm following the release of March sales numbers.

Delta Air Lines's first- and second-lien term loans were both trading stronger as the company reported record load factors for March, according to a trader.

The Atlanta-based airline's first-lien term loan was quoted at 83 bid, 85 offered, up from 82½ bid, 84½ offered, the trader said.

And, the second-lien term loan was quoted at 78 bid, 80 offered, up from 77½ bid, 79½ offered, the trader added.

For March, system traffic increased 2.3% from March 2007, with a capacity increase of 1.5%, international traffic increased 12.5% year over year on a 12.2% increase in capacity, and domestic traffic decreased 2.1% year over year on a capacity decrease of 3.2%.

In addition, a record number of passengers flew internationally on Delta during the month of March. The number of international passengers increased 11.9%, the number of Atlantic passengers increased 10.1% and the number of Latin passengers increased 13.3%, versus the same period last year.

"Internationally, we saw strong demand and solid unit revenue gains, and our international network continues to grow with the recent launch of flights to Heathrow and Shanghai," said Glen Hauenstein, executive vice president - network planning and revenue management, in a news release.

"On the domestic side, we moved quickly and aggressively to rationalize capacity in light of fuel prices and economic conditions. The benefits of these actions and our yield management initiatives, combined with the earlier Easter holiday, resulted in stronger year-over-year domestic unit revenue gains than seen last month," Hauenstein added in the release.

Northwest Airlines Corp., an Eagan, Minn.-based airline, also reported March traffic numbers on Thursday, with the company's term loan holding firm following the announcement, according to a trader.

The term loan was quoted at 81½ bid, 83½ offered, unchanged from Wednesday's levels, the trader said.

For March, consolidated traffic (mainline and regional) rose 2% from March 2007, international traffic rose 2.1% and domestic traffic fell 2.2%.

Furthermore, consolidated capacity increased 0.6% on a year-over-year basis, international capacity increased 1.9% and domestic capacity decreased 4.8%.

Hawaiian Telcom weakens

Hawaiian Telcom's term loan lost some ground during the session as more sellers than buyers emerged, according to a trader.

The term loan was quoted at 74 bid, 76 offered, down from Wednesday's levels of 75 bid, 77 offered, the trader said.

"I think guys are starting to realize that the company is in a lot worse shape than they thought. Bonds continue to be under pressure, so valuations are changing," the trader remarked.

At the start of this week, the term loan fell to the 75 bid, 77 offered context from 79 bid, 80 offered after the company released disappointing fourth quarter and full year 2007 results.

For the quarter, net income was $109.9 million, primarily attributable to the sale of the company's directory publishing business, compared to a quarterly net loss of $29.9 million in the same period a year ago.

Operating revenue for the quarter was $116.4 million, $4 million below the prior quarter and 6.6% lower than that of the previous year's fourth quarter, and adjusted EBITDA was $29.6 million.

For full year 2007, net income was $117.3 million compared to a net loss of $144.6 million in 2006.

Revenue for the full year totaled $483.7 million, a decline of $19.5 million or 3.9% from 2006, and adjusted EBITDA was $157.3 million, up 1% from 2006.

Hawaiian Telcom is a Honolulu, Hawaii-based telecommunications provider.

Idearc bid drops

Idearc saw the bid on its term loan soften as Moody's Investors Service downgraded the company and its debt, according to a trader.

The term loan was quoted at 79½ bid, 80½ offered, compared to previous levels of 79¾ bid, 80¼ offered, the trader said.

On Thursday, Moody's cut the company's corporate rating to B1 from Ba3 and credit facility rating to Ba3 from Ba2. The outlook is negative.

Moody's said that the ratings downgrade was prompted by the concern that continuing softness in Idearc's financial performance has impeded the company from achieving a reduction of debt and leverage to levels expected when ratings were first assigned in October 2006.

The negative outlook reflects the view that Idearc's financial metrics could experience further deterioration as a result of softening spending by its customers on yellow pages print advertising, and the increasing competition and disintermediation facing the company.

Idearc is a Dallas-based provider of yellow and white page directories and related advertising products.

Rite Aid steady on March sales numbers

Rite Aid's term loan was firm on Thursday as the company announced sales results for March, according to a trader.

The term loan was quoted at 90¼ bid, 91¼ offered, unchanged from Wednesday's levels, the trader said.

For the month of March, Rite Aid reported same a 2.6% increase in store sales over the prior-year period. Pharmacy same store sales increased 1% and front-end same store sales were up 5.7%.

The company said that March same store sales were positively affected by a shift to a March Easter this year from an April Easter last year.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Profit taking pushes some names lower

Recently, it appears as if investors are taking some profits off of names that have rallied recently and buying the debt that hasn't rallied as much, according to a trader.

For example, Troy, Mich.-based automotive electronics manufacturer Delphi Corp. saw its first-lien term loan drop to 94 bid, 95 offered from 94¼ bid, 95¼ offered, after spending every day this week on an upward path, the trader said.

Dollar General Corp., a Goodlettsville, Tenn.-based discount retailer, saw its term loan B-1 fall to 89¼ bid, 90¼ offered from 89¾ bid, 90¾ offered, the trader continued.

And, Ford Motor Co., a Dearborn, Mich.-based automaker, saw its term loan drop to 83 bid, 83½ offered, from 83¼ bid, 83¾ offered, the trader remarked.

Meanwhile, Michaels Stores Inc., an Irving, Texas, specialty retailer for the hobbyist and do-it-yourself home decorator, was a little higher on Thursday as people view this debt as not yet undergoing as much of a pop as its peers. The term loan B was quoted at 84¾ bid, 85¾ offered, up from 84 3/8 bid, 85 3/8 offered, the trader added.

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