Consumer Payment Card News

Delta and Cards

While the misuse of credit cards may drive some consumers into bankruptcy, a major airline may plunge into bankruptcy this month because it may not be able to accept some credit cards after August 29th. Delta Airlines is trying to work out a deal with a credit card processor to extend acceptance of payment cards beyond the end of August. However, the potential processor is requiring a significant cash reserve to be on deposit immediately upon start of the new contract for tickets purchased using VISA or MasterCard but not yet flown. Delta does not have the cash for the reserve and is exploring alternatives to offset a portion of the cash reserve. The airline currently has about $1.7 billion in cash and about $2.0 billion in bills to pay by the end of the year. The credit card deal may require $750 million in cash. Today, the airline announced it was selling one of its regional feeder subsidiaries for $425 million. But, it may be too little, too late, to avoid bankruptcy court.

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