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Delta still seeking deal with pilots

Delta Air Lines announced two financing deals on Monday, but its most sought-after agreement, with its pilots' union, remained elusive.

Delta said that it had reached a US$600 million financing agreement with American Express Travel Related Services, including a US$100 million loan. The airline also said that it had reached a deal with various debt holders to defer US$135 million in notes that were due next year.

But Delta said in a regulatory filing that it had not reached agreement on debtor-in-possession financing, which it would need to operate under Chapter 11 bankruptcy protection.

A court filing could occur as soon as today if the airline cannot agree with its pilots on US$1 billion in wage and benefit cuts and resolve other financial issues, people with knowledge of Delta's plans have said.

Delta, the US' third-largest airline behind American and United, has warned repeatedly that it will have to seek court protection unless it reaches a deal with its pilots on US$1 billion in wage and benefit cuts, and achieves agreements with its debt holders.

Delta's pilots, who are the highest paid in the industry, have proposed cuts worth up to US$705 million. Leaders of the Air Line Pilots Association, which represents Delta's pilots, met on Monday in Herndon, Virginia, where the union's national headquarters are.

The meeting came as negotiators for the union and the airline continued discussions that occurred over the weekend.

A spokeswoman for the union said late on Monday that the talks were continuing but offered no further information.

Agreement with the pilots' union is required for Delta's deal with American Express to take effect. Under it, American Express said it would lend Delta US$100 million as part of a credit facility. Delta said it was still completing deals with other lenders.

Delta agreed to pay American Express in advance for US$500 million in SkyMiles, which are awarded by its frequent-flier program.

American Express credit card customers can earn SkyMiles through their purchases.

The agreement is backed by Delta's assets, and includes lengthy requirements that Delta must meet in case it seeks Chapter 11 protection.
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