Wells Fargo wants DL to assure it that its collateral will be maintained

[FWAAA]

Wells Fargo has asked the judge to force DL to continue using 32 767s, 757s and MD-80s and MD-90s in passenger service to ensure that the airplanes remain airworthy:

Delta Creditors Push for Jet Maintenance

Tuesday February 7, 9:03 pm ET
By Aleksandrs Rozens, AP Business Writer

Delta Creditors Seek Pledge That Jets Used As Collateral Will Be Maintained

NEW YORK (AP) -- A trustee for Delta Air Lines Inc. bond investors asked a bankruptcy court judge Tuesday to force the carrier to ensure proper maintenance of jets that are pledged as collateral for debt.

Wells Fargo Bank N.A., the bank serving as trustee for investors who purchased the carrier's debt, said it wants a guarantee that Delta will keep up with regular maintenance of 32 planes it used as collateral for a 2004 debt offering so the aircraft do not lose their value.

The trustee wants Delta to keep using the planes for passenger service, to ensure they remain airworthy.

As a trustee, Wells Fargo ensures that Delta bond holders receive timely principal and interest payments each month. The securities were sold with a 9.5 percent interest rate.

The bond holders have not received any of their principal and interest payments -- about $250 million to date -- after Delta declared bankruptcy in September 2005. That money is not expected to be paid back until the Atlanta-based company emerges from bankruptcy.

http://biz.yahoo.com/ap/060207/delta_bankruptcy.html?.v=3

Delta is likely to continue flying these airplanes, but Wells Fargo's demand is interesting.

 

[luv2fly]

Wells Fargo has asked the judge to force DL to continue using 32 767s, 757s and MD-80s and MD-90s in passenger service to ensure that the airplanes remain airworthy:
http://biz.yahoo.com/ap/060207/delta_bankruptcy.html?.v=3

Delta is likely to continue flying these airplanes, but Wells Fargo's demand is interesting.

It really doesn't make much sense. There have been no forecast announcements or plans to retire these aircraft. As such, you would assume if they remain part of the fleet they will be maintained in a flyable status. Our MD-90's are currently operating out of SLC. To date, the only aircraft lost to BK have been 3 767-300's. I believe a few MD88's still have to be negotiated. The 75's are in demand to fill the domestic void left by the international expansion. Unless something else has transpired with the fleet, Fargo's concerns appear to be baseless. Perhaps the 767's they are referring to are the -200 fleet.

 

[USAir757]

Very interesting, indeed.

I thought all of the 762's were returned to the lessors, or are they just being stored until the leases run out?

 

[LGA Fleet Service]

Very interesting, indeed.

I thought all of the 762's were returned to the lessors, or are they just being stored until the leases run out?

IIRC all of the 762's have have been sold to ABX.Maybe they are refering to a small number of 300's?

 

[FWAAA]

Here's an update: The judge has ordered DL to pay $2 million a month as a cushion against possible declines in value due to maintenance issues:

http://biz.yahoo.com/ap/060208/delta_bankruptcy.html?.v=2