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S&P: Delta Air Lines unchanged
Standard & Poor's said that Delta Air Lines Inc. (rated D) filed a proposed plan of reorganization, targeting emergence from bankruptcy in 2007 as an independent entity.
Delta disclosed also that its board had rejected an acquisition proposal by US Airways Group Inc. (B-/Watch developing), and S&P said that its ratings on Delta, including the D corporate credit rating, which is defined by the company's bankruptcy status, are not affected.
Ratings on enhanced equipment trust certificates remain on CreditWatch with developing implications, except AAA rated, insured EETCs, which are not on CreditWatch, the agency said.
If Delta is successful in its proposed plan of reorganization, ratings on EETCs that are on CreditWatch would likely be affirmed or raised, as the airline plans to affirm or repay aircraft obligations securing the certificates, the agency said.
The agency added in an analysis of the proposed plan Delta filed for bankruptcy reorganization, it found Delta's plan less risky than US Airways' merger proposal, but reliant on assumptions that may be optimistic.
The agency said its commentary looks at the key forecast data and risks and assumptions of the new plan.
"Delta's proposed reorganization plan involves less risk than US Airways' merger proposal in that it would not face antitrust review by the Department of Justice, would not involve potentially difficult labor integration and would not require $4 billion in acquisition debt," said S&P credit analyst Philip Baggaley.
"However, Delta's stand-alone plan foregoes opportunities for merger synergies and, like US Airways' acquisition forecast, rests on various assumptions, some of which may prove overly optimistic."
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