Local officials won't throw in the towel on Delta

By Ed Brock

On the day after Delta Air Lines filed bankruptcy, officials around Clayton and Henry counties were trying to be optimistic about the future.

"It's unfortunate. But you're looking at a very dynamic airline," said Morrow City Manager John Lampl.

"They're a major economic engine," Forest Park City Manager Bill Werner said. "I'm hoping this will put them on good footing."

"I think it will have some effect," McDonough City Manager James Lee, where many Delta employees live. "It depends on which economist you read as to how much."

"It's something that's been hanging out there. We hoped it wouldn't happen ... now that it did we have to see how it plays out," Riverdale City Manager Iris Jessie said. "We're hoping for the best."

"I sure hope they'll recover, for the employees' sake and the company's sake," said Stockbridge City Manager Ted Strickland.

"This is not a Chapter 7 (bankruptcy in which the business closes down)," U.S. Rep. David Scott, D-Georgia, said. "Things will still go on."

The largest taxpayer in the county, Delta owes the county and the

Clayton County School Board about $21 million in taxes, $5 million of that to the county alone, according to Clayton County Commission Chairman Eldrin Bell. However, Bell said that the county's finances are strong enough that they will not have to insist on collecting that bill any time soon.

Also, the county has formed a special committee to monitor issues related to Delta's bankruptcy. He said he is optimistic that Delta will come out of bankruptcy in sound financial shape and will continue to operate and pledged the support of the county in helping make this a reality.

Delta filed the Chapter 11 petition in U.S. Bankruptcy Court for the Southern District of New York near the end of business on Wednesday. In announcing the filing Delta CEO Gerald Grinstein said the company would continue to function and he did not give many details about the restructuring process. It is also unclear how long the process will take.

More job reductions and pay changes would continue to be necessary, Grinstein said, but he didn't give any numbers. And while the company is seeking legislation to make keeping its retirement benefits plan affordable, the company wasn't giving any guarantees.

"That will hit seniors, of course," Lampl said. "I think that will have an impact."

Lampl said Delta retirees do make up a portion of the city's population. And as a town built largely on retail stores, Morrow could be affected by any impact on sales if there are salary cuts.

"That has an impact on what people buy," Lampl said.

Jessie said she's sure there are Delta employees and vendors who do business with Delta that are inside the city, though she doesn't know how many or how they will be affected by the bankruptcy filing.

"We are waiting to learn something from the county on what their projections are on lost sales tax," Jessie said.

Along with the almost certain closing of U.S. Army Garrison Forts McPherson in Atlanta and Gillem in Forest Park, the Atlanta south metro area is in for difficult economic times, Scott said.

"The doorposts of our economy in the south metro area are shaking," Scott said. "We have to use a way to shore our door posts up."

Scott said he is working on legislation that will allow Delta to spread out its pension payments for a longer period of time.

"That's a safety net," Scott said, adding that he hoped they would not have to use it.

The pension plan and the high cost of fuels, which sailed even higher after Hurricane Katrina put a dent in production, have hit the airline the hardest.

"No matter what we do, we've got to find a way to bring down the cost of fuel," Scott said.

Like Lampl, Scott said he didn't expect massive layoffs to occur as a result of the actual bankruptcy filing, although last year about 7,000 jobs were cut as part of a restructuring plan aimed at avoiding bankruptcy.

"Rather, Delta is using bankruptcy as a good plan for financial restructuring and to access an immediate infusion of cash to pay off debts," Scott said.

As for further salary cuts, Delta has been negotiating for years with its pilots' union, the Air Line Pilots Association, over cuts in the pilots' salaries. On Monday the company sent the union another proposal and from this coming Monday to Wednesday the union's Master Executive Council will meet to consider that proposal.

"This is a day we hoped would never come. However, we are prepared for this event," wrote Capt. John Malone, the MEC chairman, in a letter to members posted on the union's Web site. "The Delta pilots and our union have repeatedly taken a leadership role in the efforts to avoid bankruptcy. Unfortunately, Delta's plan to avoid bankruptcy was not successful. Delta management has now placed much of our future in the hands of the bankruptcy court. We will use all legal means to protect our contract."

Meanwhile, Delta's stock continued to trade at under $1, down to 75 cents a share by late Thursday afternoon.