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Delta stock climbs as much as 30%

Surge comes as rumors fly about deal with pilots

Delta has offered to swap $680 million of debt for notes secured by $1.2 billion worth of debt-free aircraft.
Delta has offered to swap $680 million of debt for notes secured by $1.2 billion worth of debt-free aircraft.
Tom Smart, Deseret Morning News

ATLANTA — Delta Air Lines Inc.'s shares surged as much as 30 percent Tuesday amid speculation that the nation's third-largest airline would win $1 billion in concessions from its pilots and avoid filing for bankruptcy.

Delta, which operates a hub at Salt Lake City International Airport, is expected to decide by today whether to seek Chapter 11 bankruptcy protection — but that could be delayed if the airline and pilots' union reach agreement or if talks are extended. Intense negotiations on a labor deal recessed Tuesday evening. A union memo to pilots said talks would resume this morning. Both sides declined to elaborate.

Also Tuesday, Delta and the Professional Airline Flight Control Association, a separate union that represents Delta's 185 flight superintendents, said they have reached a tentative agreement on new contract terms.

The news followed an announcement Monday that the cash-strapped airline had reached a $600 million financing deal with an American Express Co. subsidiary contingent upon, among other things, Delta securing $1 billion in concessions from its pilots.

In trading Tuesday, Delta's shares surged as high as 30 percent on the New York Stock Exchange before closing up 85 cents, or 22 percent, at $4.63. The shares have risen more than 40 percent so far this week.

Tuesday was also Delta's self-imposed deadline for debt-holders to respond early to an exchange offer meant to give the airline breathing room.

Delta had offered to exchange $680 million of its debt with new notes secured by $1.2 billion worth of debt-free aircraft, flight simulators and flight training equipment. The offer was made to holders of $2.6 billion in various forms of Delta debt.

Earlier this month, Atlanta-based Delta extended a debt exchange offer to Nov. 18 but said it would give some creditors a better deal if they agreed to the terms by Tuesday. There was no word about what the creditors' response has been to the offer.

The airline has warned that its massive debts could force it into bankruptcy, even if its unions agree to big concessions.

The pilots have publicly offered up to $705 million in savings and have not released details of subsequent offers. In a regulatory filing made earlier this month, Delta said that to date the union's "counterproposals have been for substantially less than $1 billion." The company also said in the filing that the union was requesting for pilots a stock option program that involves "substantially more equity" than management's proposal.