- The Washington Times - Tuesday, August 9, 2005


A judge yesterday allowed US Airways to send its reorganization plan to creditors for a vote, moving the Arlington airline one step closer to emerging from bankruptcy.

Meanwhile, Delta Air Lines Inc.’s battered stock plunged to a new low yesterday after a Wall Street analyst advised clients to sell their shares on fears the nation’s third-largest carrier will file for bankruptcy within the next two months.

U.S. Bankruptcy Judge Stephen Mitchell scheduled a hearing for Sept. 15 to consider final court approval of US Airways’ reorganization plan.

The hearing is scheduled two days after America West Airlines shareholders are scheduled to approve the company’s merger with US Airways. The merger is the centerpiece of the struggling airline’s reorganization plan.

The plan, however, does not resolve several objections from the airline’s unions. Labor groups are upset that US Airways wants to scale back a proposed profit-sharing plan with workers to accommodate new investors in the merged airline.

Judge Mitchell urged the airline and unions to settle before the Sept. 15 hearing.

When the merger is approved, America West stockholders will receive shares in the new US Airways Group for their America West stock. The exchange rate will be 0.4125 shares of the new firm for each share of America West stock.

The combined airline’s stock symbol will be LCC — which stands for low-cost carrier — on the New York Stock Exchange.

Delta’s shares fell 28 cents, or 12.6 percent, to close at $1.95 on the New York Stock Exchange. The stock was at a 43-year low before yesterday’s plunge.

The dip came on the heels of a research note by Merrill Lynch analyst Michael Linenberg, who lowered the Atlanta airline’s rating from neutral to sell. Mr. Linenberg said a surge in fuel prices increases the chances of Delta filing for bankruptcy within two months.

“We think the probability of a Delta bankruptcy filing has grown, and we think investors should be mindful of October 17, when more restrictive bankruptcy legislation becomes effective,” he said. “That could be a key factor in a Delta deciding whether to file for Chapter 11 bankruptcy.”

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