Oneida bank debt drops; Delta bonds lose altitude

By Paul Deckelman and Sara Rosenberg

New York, July 23- Oneida Ltd. was one of the biggest movers in the distressed loan market Friday - even though the there was no fresh news seen out on the upstate New York-based maker of flatware, dinnerware, crystal, glassware and metal serveware.

Among bond investors, little real activity was seen, with the typical "summer Friday" effect kicking in and causing many market players to get an early start on the weekend by fading away shortly after noon.

However, one name which was seen moving around was Delta Air Lines Inc., whose bonds were seen several points lower.

Oneida's bank loan dropped by about five or six points on the day to close around the 84 level, according to a trader, even though no specific news was seen pushing the paper down.

The most recent news that the Oneida, N.Y.-based company put out was about two weeks ago, when it announced the signing of a letter of intent to sell substantially all of the assets of its Encore Promotions Inc. subsidiary to Bradshaw International Inc. - which Oneida said would allow it to concentrate on its core cutlery business. The deal also calls for Oneida to enter into a licensing agreement with Bradshaw. The sale is expected to be completed by July 31.

Back on the bond side of the fence, Delta's bonds were seen about two to three points lower, with the Atlanta-based air carrier's 10 3/8% notes due 2011 seen about three points down at 49 bid.

There was no news seen out Friday on Delta - although the company had announced on Thursday that it will delay the delivery of 10 aircraft and cancel its option to buy another 113 planes from Boeing Co. through 2007.

Delta plans to defer taking delivery of two Boeing 777 deliveries, originally scheduled for 2005, until 2008, and is deferring delivery of three Boeing 777s, originally scheduled for 2006, until 2009. Five more Boeing 737-800s, originally scheduled for 2006 will not be accepted until 2007.

The aircraft deferrals - and the cancellation of the bigger aircraft option deal - come at a time when Delta is looking for ways to cut costs.

During the week, Delta's bonds had gotten a short-lived jolt after the Air Line Pilots Association were reported by The Wall Street Journal to have offered pay cuts of as much as 23.5% to the beleaguered airline, which is trying to reduce its highest-in-the-industry pilot costs in order to get a more realistic cost structure that will let Delta compete better with its sector rivals, such as old-line carriers American Airlines, Continental Airlines, Northwest Airlines and the bankrupt United Airlines, as well as the low-cost carriers like long-time industry leader Southwest Airlines and its upstart cohorts like Jet Blue, AirTran and ATA Holdings.

The 7,500 pilots also offered work-rule concessions that could save additional money.

But that bounce evaporated quickly after Delta - which had already asked for pay cuts of at least 34.5% and total savings from the pilots of 45%, and had said it did not want to indulge in piecemeal efforts to cut its spending - effectively told the pilots to ante up some more.

On Wednesday, Delta CEO Gerald Grinstein told the pilots union that its proposal, which would save up to $705 million a year, is a good start - but doesn't go far enough.

Grinstein said of the proposal in a company statement that "the good faith effort it conveys is welcomed and appreciated even though, unfortunately and as we've discussed with ALPA, our rapidly deteriorating financial situation means more will be required to position Delta for long-term viability."

He said that he has scheduled a meeting for July 28 to discuss the company's future. Employees will be invited and questions will be taken about issues including the proposal - but it will not be a formal negotiation session.

Loral steady at higher level

Elsewhere, distressed trading was seen almost moribund, a trader said. "I don't think anything was acting too well. Spreads are widening, and with everything that's going on, people want to cut back on riskier positions and find a safe haven."

There was no movement Friday, for instance, in the bonds of Loral Space & Communications Ltd., which had moved solidly Thursday after the New York -based communications satellite company said that it had reached an agreement with its creditors on the broad outline of its proposed reorganization plan.

Loral's bonds were unchanged Friday; on Thursday the bonds had "moved up big-time," a trader said, quoting the company's 9½% notes due 2006 as having pushed up to 38 bid from recent levels as low as 32, and pegging the 10% notes due 2006 issued by the company's Loral Orion Inc. subsidiary at 78.25 bid, up three to four points from there they had been earlier in the week.

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