• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Delta Air Lines Reveals $1.1 Billion Loss in Weeks After Bankruptcy Filing

Posted on: Thursday, 1 December 2005, 12:00 CST

By Russell Grantham, The Atlanta Journal-Constitution

Dec. 1--NEW YORK -- Delta Air Lines said it lost about $1.1 billion in the first six weeks after seeking bankruptcy court protection from creditors, but new loans after the Chapter 11 filing boosted its available cash to more than $2 billion.

Wednesday's disclosures in bankruptcy court filings came as Delta's bankruptcy judge held a fifth day of hearings on management's request to get $325 million in annual pilot cost savings by voiding the union's contract.

In its first monthly financial report to the court since filing for Chapter 11, Delta said its net loss was $472 million in the six-week period from Sept. 15 to Oct. 31, excluding reorganization expenses that deepened the loss past the $1 billion mark.

Delta said those reorganization costs totaled $648 million, mostly from expenses related to terminating aircraft leases and old debt write-offs.

The report did not include legal and professional fees that are expected to top millions of dollars per month. The carrier said it won't begin paying such fees until Dec. 5.

Meanwhile, the airline's jet fuel bill -- its single largest expense -- soared to $642 million, or about one-third of its $1.95 billion in revenue during the period.

The revenue figure does not count emergency financing Delta got to shore up its cash supply during the bankruptcy case.

Delta reported an operating loss, which offers a better reflection of daily operations, of $381 million during the six weeks.

Delta's figures are not easily comparable to its previous financial reports, which were on a normal quarterly schedule.

Companies reorganizing under Chapter 11 are generally required to file monthly financial reports. The court allowed Delta to delay its first report, so the results reflect the last two weeks of the airline's third quarter, which ended in September, plus October's figures.

Delta three weeks ago posted a $1.1 billion net loss for the three months ended Sept. 30, although more than half was in restructuring charges.

In the pilot contract hearing Wednesday, turnaround expert Timothy Coleman continued testimony on the airline's financial straits, which Delta hopes will persuade Judge Prudence Beatty to grant its request to void the pilot contract and impose new pay cuts.

Coleman, with the New York firm Blackstone Group, said Delta had hoped to get about $550 million from the sale of its regional carrier Comair early next year but ditched those plans when it became "clear that it needed its own overhaul." Delta sold regional airline Atlantic Southeast Airlines last summer but still owns Comair.

Under cross-examination by the Air Line Pilots Association's lawyer, another Delta witness, airline industry consultant Daniel Kasper, agreed that jet fuel prices have since fallen enough to reduce Delta's costs next year by $425 million if prices don't rise again.

But Delta argued that discount carriers are likely to drive fares lower as fuel prices fall.

Northwest Airlines, which filed for Chapter 11 protection the same day as Delta, also issued a six-week report on Wednesday.

The Eagan, Minn.-based carrier said it lost $346 million, including $136 million from operations and $158 million for reorganization expenses. The rest of the loss included items such as interest expense.

The loss for the period came on revenue of $1.57 billion. Northwest said it had $1.6 billion in cash and short-term investments on Oct. 31.

The carrier posted a net loss of $475 million for the quarter that ended Sept. 30.

-----

To see more of The Atlanta Journal-Constitution, or to subscribe to the newspaper, go to http://www.ajc.com.

Copyright (c) 2005, The Atlanta Journal-Constitution

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

DALRQ, DAL, SKYW,

Source: The Atlanta Journal and Constitution

More News in this Category