Delta to Sell 11 Planes, Slash Flights

ATLANTA – Delta Air Lines (DAL) agreed to sell 11 Boeing 767-200 jets and moved to slash flights out of Cincinnati, its second-largest hub, in what the troubled carrier said on Wednesday was a bid to restructure faster.

The moves come amid widespread speculation that the No. 3 U.S. carrier will be forced to seek bankruptcy protection by the end of the year as it struggles with high fuel and pension costs.

"I think it's their attempt to stay out of Chapter 11," Helane Becker, an analyst at The Benchmark Company said, adding that she did not think the steps would be enough to prevent a bankruptcy filing.

Delta shares were up 9 cents, or 8 percent, at $1.21 in early trading on the New York Stock Exchange, bouncing back from a 50 percent slump in the month ending Tuesday.

Cargo airline ABX Air Inc. (search) said it was paying about $190 million to purchase and modify the 11 Boeing 767 planes for freight use. Delta said it was selling them because the 767-200 was the least fuel-efficient plane in its fleet.

ABX, which had already bought one such plane in July, will take delivery of six of the planes this year, two in 2007 and three in 2008, paying only as the planes are delivered.

Delta also said it would reduce capacity at Cincinnati-Northern Kentucky International Airport, its second-largest hub after Atlanta, by 26 percent.

In addition, it will end direct service from Cincinnati to nine markets served by its ASA and Comair regional affiliates.

At the same time, Delta said it will boost service on more profitable international routes, the latest U.S. carrier to shift capacity outside of the U.S. market, where they face cut-throat competition with low-cost carriers like Southwest Airlines Co. (LUV) and JetBlue Airways Corp. (JBLU).

The Atlanta-based airline will begin service from its home airport to destinations including Managua, Nicaragua; Puerto Vallarta, Mexico; Antigua; and Dusseldorf, Germany.

Delta is trying to avoid a bankruptcy filing — which would give the airline an easy way to cut labor costs and a crushing pension burden — because companies lose control over their futures in bankruptcy, Becker said.

"The jury is still out on whether bankruptcy works really well," she said, pointing to No. 2 U.S. airline UAL Corp., which still faces an uncertain future after more than two years in bankruptcy court.

But Delta's absence of hedges to protect it from spiking jet fuel costs still makes a bankruptcy filing a near certainty, she said.