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Not So Fast, Say Delta Creditors

Say They Expect Airline To Consider Other Than 'Stand-Alone' Options

Emerging from bankruptcy as an independent, stand-alone carrier should not be the only option on Delta's table, according to a group of the airline's creditors.

Those creditors include Deutsche Bank Securities and Lehman Brothers, as well as bond holders, hedge funds and other investors, who hold approximately $2.25 billion in unsecured claims against Delta. Their comments to Reuters suggesting that Delta consider partnerships may be a sign all its creditors are not confident that the "independent Delta" plan is the best option.

As a group, Delta's creditors are officially represented by a nine-member, court-approved committee. The ad hoc group speaking publicly last week, known as the Unofficial Committee of Unsecured Claimholders, emerged soon after US Airways' November 15 bid. Its spokesman says it's seeking a greater say in Delta's future.

The unofficial creditor group has 17 members, up from nine on December 6, according to its statement last week. A number of members have been Delta investors for years, said one source.

"(It) [the ad hoc group] looks forward to analyzing carefully and discussing with Delta the proposed plan and the assumptions upon which it is based," the unofficial group's financial adviser, Jefferies & Co., said on its behalf. "It expects Delta to consider methodically, proactively and fairly strategic alternatives to its proposed stand-alone Chapter 11 plan."

Delta has been operating under Chapter 11 protection since September 2005 and filed a plan of reorganization earlier this month that would see it emerge from bankruptcy as an independent carrier, rejecting an $8.3 billion takeover offer from US Airways Group.

Creditors holding at least two-thirds of the value of total impaired claims - debt that will not be repaid in full - must vote in the plan's favor for it to succeed, according to Reuters. The bankruptcy court also needs to approve the plan.

Delta assumes a total claim pool of about $15 billion, but has repeatedly said it intends to emerge from bankruptcy as an independent carrier. It hopes to get creditors to vote on its plan by February or March so that it can exit bankruptcy by spring.

The ad hoc group would like to hire former Continental Airlines Chief Executive Gordon Bethune as a consultant, according to a bankruptcy court filing. Bethune retired from Continental in 2004 after more than a decade of service. He is currently chairman of Aloha Airlines parent Aloha Airgroup.

After Delta announced its reorganization plan last week, however, Chief Executive Gerald Grinstein said the airline would not want to be left out "if the process of (airline industry) consolidation starts."

FMI: www.delta.com, www.usair.com, www.keepdeltamydelta.org

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