Delta Air Lines Inc on Wednesday said General Electric Co's finance arm has agreed to relax certain requirements under a credit agreement, a move seen as likely allowing the cash-strapped carrier to stave off a bankruptcy filing this year. The amended deal lowers the specified levels of required earnings before interest, taxes, depreciation, amortisation and aircraft rent - a key performance indicator for airlines known as EBITDAR. Delta, whose shares rose 1 percent, said it asked for the reduction due to historically high fuel prices.
The amended credit agreement requires Delta to maintain at least $1 billion in unrestricted funds at all times. Previously, the $1 billion minimum was scheduled to be reduced to $750 million after October 31.
The amendment of the GE credit line is the latest step Delta has taken to shore up its foundering financial condition. The Atlanta-based carrier last month said it would not generate sufficient cash to meet its needs this year.
US Airways allowed to weigh rival bids
Earlier, a federal judge on Tuesday allowed bankrupt US Airways Group Inc to consider any investment bids that would rival its proposed merger with America West Holdings Corp.
Judge Stephen Mitchell of the US Bankruptcy Court for the Eastern District of Virginia approved procedures that would give qualified investors 30 days to submit alternative plans to help US Airways emerge from bankruptcy protection.
"We want to shake the tree and see if there are any higher or better offers available," Brian Leitch, US Airways lead bankruptcy attorney, told the court.
So far, the merger proposal by America West and a group of investors is the only one that has been negotiated.