Delta Air Lines Cleared to Exit Bankruptcy Today

A U.S. bankruptcy court on Wednesday gave Delta Air Lines the go-ahead to exit Chapter 11 today, ending a year and a half in bankruptcy. “I will sign the confirmation order,” Judge Adlai Hardin said at a hearing in U.S. bankruptcy court in New York.

Delta, the number-three U.S. carrier and one of the largest bankruptcies in US history, was relieved to finally be exiting Chapter 11. “We're free at last,” said Chief Executive Gerald Grinstein. “I feel elated.”

Delta is emerging from Chapter 11 as the fledgling recovery in the US airline industry is threatened by softening demand. A number of US airlines, including Southwest and JetBlue Airways, have recently complained of sluggish bookings ahead of the busy summer travel season.

But Delta believes its expansion into lucrative international markets and lower costs will help it weather a downturn. It had forecast a pretax profit, before special items, of $816 million this year, after a loss of $452 million in 2006.

Since filing for Chapter 11 in September 2005, Delta has slashed about $1 billion from labor costs, reduced capacity in the hard-fought domestic U.S. market, and boosted service to markets in Latin America and the Middle East, as part of $3 billion turnaround plan.

The company was pushed into bankruptcy after racking up nearly $19 billion in debt and accumulating $7.5 billion in losses between 2001 and 2005 amid high costs and low-fare competition.