Delta drifts lower; Northwest firm; Salton bonds slip

By Ronda Fears

Memphis, Nov. 17 - Airline paper buoyed traffic on distressed debt desks Friday, but Delta Air Lines Inc. bonds drifted lower as players considered that the US Airways Group, Inc. bid has opened a door to a path that may be long and arduous.

Delta's slide was largely attributed to profit taking from the spike that took its bonds to near 70 from the lower 30s area after the US Airways bid popped up Wednesday, as some felt the situation may take a long time to come to a resolution.

"Basically, I think there's a good chance the merger gets done," but it will take a while to play out, said a distressed debt trader. "What we are seeing is a lot of profit taking. If you bought in the 20s or the 30s, it would be hard to resist."

Still, while the ETA for an outcome in the Delta story may take a while, the move toward further consolidation in the airline industry has breathed new life into the bonds of Northwest Airlines Corp., which were still finding a few takers Friday.

Elsewhere, Salton Inc.'s bonds were easing from some exuberance seen on the possibility of a merger with rival Applica Inc. at the behest of Harbinger Capital Partners Master Fund I, Ltd. - a majority stakeholder in both companies.

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