Can you tell me what this means for Delta Airlines?

[napi21]

Delta Air Lines Inc. shareholders voted May 19 to let the struggling airline increase the number of shares it can issue to 900 million, according to a filing Monday with the Securities and Exchange Commission.

The Atlanta-based airline (NYSE: DAL) previously could issue up to 450 million shares, the filing noted.

Delta shareholders also voted to reduce the par value of the common stock to 1 cent a share from $1.50 a share.

The shareholder authorizations came at the company's annual meeting with shareholders last week in Atlanta at the Georgia International Convention Center near Hartsfield-Jackson Atlanta International Airport.


**I understand what the additional shares means...diluting the ourstanding shares.

What I don't quite understand is reducint the par value ofthe common stock to 1 cent. Can someone explaine that to me please?

[lonestarnot]

1. Hope it helps ... my skymiles depending on it!

[Davey Crockett]

2. Here you go

People often get confused when they read about the "par value" for a stock. One reason for this is that the term has slightly different applications depending on whether you are talking about equity or debt.

In general, par value (also known as par, nominal, or face value) refers to the amount at which a security is issued or can be redeemed. For example, a bond with a par value of $1,000 can be redeemed at maturity for $1,000. This is also important for fixed income securities such as bonds or preferred shares because interest payments are based on a percentage of par. So, an 8% bond with a par value of $1,000 would pay $80 of interest in a year.

It used to be that the par value of common stock was equal to the amount invested (as with fixed income securities). However, today most stocks are issued with either a very low par value (such as $0.01 per share) or no par value at all.

You might be asking yourself why a company would issue shares with no par value. Corporations do this because it helps them avoid a liability to stockholders should the stock price take a turn for the worse. For example, if a stock was trading at $5 per share and the par value on the stock was $10, then the company theoretically would have a $5 per share liability.

Par value has no relation to the market value of a stock. A no par value stock can still trade for tens or hundreds of dollars. It all depends on what the market feels the company is worth.