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Delta bankruptcy remains possibility, CEO says

ATLANTA -- Delta Air Lines Inc.'s tentative deal with pilots for $1 billion in concessions gives the nation's third-largest carrier much-needed breathing room. But its crucial debt restructuring efforts remain a work in progress, and Delta's chief executive cautioned yesterday that bankruptcy remains a possibility.

The airline still must win the backing of its roughly 7,000 pilots, who will vote on a new contract with a 32.5 percent wage cut effective Dec. 1 and no raises for the rest of the five-year pact.

Delta also must convince the holders of its $20.6 billion in debt to restructure the repayment terms for all the pieces of its transformation puzzle to fall into place.

For now, investors, passengers, and employees seem relieved that Atlanta-based Delta appears better positioned to compete against discount carriers that operate with much lower costs.

''Reaching a preliminary pilot agreement is the single most important hurdle they have to clear, but certainly not the only one," said Philip Baggaley, an airline analyst with Standard & Poor's in New York. ''They're not out of the woods yet."

Among other concessions are revisions in the pension plan and work rules. In return, pilots would get options to purchase up to 15 percent of the company's stock.

Delta remained mum yesterday on its progress in winning concessions from its debt holders. The company has 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.

During the next two weeks, union members will be given details about the proposed pilot agreement. The pilots will vote on the plan over 10 days, starting Monday.

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