Delta staff have the option to acquire shares in return for pay cuts

Delta, which is fighting the threat of insolvency, has been cleared to issue the shares to staff and bondholders by the New York Stock Exchange.

About 57,000 staff are to receive new shares as part of an incentive package tied to cuts in pay and benefits.

Pay will be reduced 10% across the board and up to 6,900 jobs will be cut.

In jeopardy

Shares will also be given to bondholders, who last month crucially agreed to defer soon to mature debt, and to aircraft leasing firms participating in a financing concession programme.

Delta sought to push through the plan without the approval of its shareholders, claiming that any delay could "seriously jeopardise" its financial viability.

It has now been given the go-ahead by the NYSE.

The carrier is trying to avoid the fate of a number of other US airlines which have been forced to seek bankruptcy protection because of high costs, flagging demand and intense competition.

There is light at the end of the tunnel Jim Corridore, Standard and Poor's

Last month the airline reached a crucial outline agreement with pilots on pay and conditions which could save it $1bn.

Under the terms of the deal, about 6,900 pilots would receive share options in return for accepting a 32% pay cut.

Making progress

However, the airline needs to save $5bn a year and has warned that it still faced the possibility of insolvency.

"If they can get approval to issue shares for the job cuts and to cut pay, they are making progress," said Jim Corridore, an analyst with Standard and Poor's.

"With oil prices backing down, there is hope that there is light at the end of the tunnel."

Delta's finances have deteriorated sharply this year.