Bankruptcy, Pay And Pensions: Delta's Day In Court...

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Bankruptcy Plea Aims To Save Carrier

Delta Air Lines is in deep financial trouble, everyone agrees the company has already lost over $2.6 billion this year -- but whether that trouble is due to market forces beyond the airline's control or bad decisions by management is now being worked out in federal bankruptcy court in New York. Delta is trying to convince the court that it needs to cut labor costs in order to survive a position opposed by its pilots, who say that if the court lets Delta void their contract, they'll strike. The pilots have offered $90.7 million in concessions, but the airline wants to impose $325 million in wage cuts. This week, Judge Prudence Carter Beatty asked Delta to defend its decision to spend $2.4 billion to buy back its own shares before it filed for bankruptcy in September, The Associated Press reported. "It is a question of if you had that money rather than had spent it that way, you might not be in the position you are in," she said. Beatty added that the buyback may have been undertaken to placate Wall Street's financial community, the AP reported. "I'm buying something worth nothing to me in order to make the stock-market price look good," she said. Delta's Chief Financial Officer Edward Bastian said further cuts are absolutely necessary. "We are losing cash at a fairly alarming rate. If we don't stop losing cash, we won't make it," he said. Another witness for Delta, Daniel Kasper, testified that competition from low-cost carriers and other market forces has driven down ticket prices while at the same time the airline is stuck with high labor costs. On Tuesday, the court gave the airline the OK to sell off some airplanes, including Embraer 120s, Boeing 767s and Boeing 737s, though it was unclear if the airline actually plans to sell any. Delta filed for Chapter 11 on Sept. 14.