American Express Travel Related Services Co. will provide $600 million in financing to Delta Air Lines in the form of a $100 million loan and $500 million in prepayment of Delta’s frequent-flier program. Commitments from other lenders are being negotiated to support the new credit facility. Delta will receive the prepayment in two installments of $250 million.
Delta reported a $646 million net loss in the third quarter. Total year-to-date losses were nearly $3 billion.
Of the other troubled U.S. airlines, US Airways said pilots represented by the Air Line Pilots Association (ALPA) voted to ratify a new agreement that calls for an 18% pay cut, decreased company contributions to the defined-contribution pension plan, and modification of work rules.
Pilots won a profit sharing plan and equity participation shares.
The deal will save the airline $300 million annually.
Earlier, bankruptcy judge Stephen S. Mitchell granted US Airways relief from its labor contracts, clearing the way for US Airways to cut pay by up to 21%. The airline had sought to cut wages by 23%.
American Airlines’ parent AMR Corp. posted third quarter losses of $214 million. Operating revenues were up 3.4% to $4.76 billion during the period, but expenses climbed 7.9% to $4.79 billion.
Year to date, American posted a net loss of $374 million. This is an improvement from the $1.12 billion loss for the same nine-month period in 2003.
The airline announced it would make job cuts and would withdraw capacity equivalent to 15 narrow-body aircraft in 2005. This and other moves will reduce domestic U.S. capacity by 5% in the first quarter.
