Delta Air Lines May Drop Preparation For Chapter 11 Filing

More details have come out. It turns out that AE negotiated a priority
position in case of default. I wonder what the accounting implications
for that are? Delta may have a problem with how the payment is carried
on the books. I suppose their team of crack ex Enron accountants has
approved it though.

nobody wrote:

"Frank F. Matthews" wrote:

will not go 11. Interesting that 500 ,million is prepayment for
frequent flyer miles. That indicates that AE expects them to stay
around but seats will be really hard to find.


It won't make a difference to seat availabily. Amex already sends big fat
cheques to Delta every month for the purchase of Delta FF miles which Amex
then gives to customers for every dollr tehy spend on the card. The $500
million is simply prepayment for the miles AMEX will be giving to customers
over the next X period.

It would be interesting to know just how long it will take for AMEX to
distribute those miles.

If Amex negotiated a rate of say 2 cents per mile, that gives them 50*500 000
000 = 25000000000 FF points to hand out. It may take a while before
cardholders of AMEX cards spend that much money.