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Delta Air Lines Posts $52M Profit in 3Q

Posted on: Friday, 10 November 2006, 03:00 CST

By HARRY R. WEBER

ATLANTA - Delta Air Lines Inc., the nation's third-largest carrier, said Thursday it swung to a $52 million profit in the third quarter thanks in part to a one-time gain due to a decrease in previously estimated pre-bankruptcy claims for restructuring of aircraft financing deals.

The Atlanta-based company, which is operating under bankruptcy protection, said the profit for the three months ended Sept. 30 amounted to 22 cents a share, compared to a loss of $1.13 billion, or $6.73 a share, for the same period a year ago.

Excluding reorganization items, Delta said it lost $46 million in the quarter.

Revenue in the July-September quarter rose 8.1 percent to $4.66 billion from $4.31 billion in the same period a year ago.

The net profit in the third quarter included a $98 million non-cash gain from reorganization items, which primarily related to the aircraft financing arrangements issue. It was Delta's first net profit since it entered bankruptcy in September 2005.

"We're encouraged," Ed Bastian, Delta's chief financial officer, said in an interview. "We won't be happy until we're out of bankruptcy and have a secure future."

There has been speculation that Bastian and Chief Operating Officer James Whitehurst are in the running to take over the chief executive job from Gerald Grinstein after Grinstein leaves the company following Delta's emergence from bankruptcy. Bastian said Thursday he is focusing on his current job and nothing else.

"I spend very little time worried about other people's jobs," Bastian said. He added, "That's a board decision. Whichever way it comes out, I'm sure we'll both be happy and employed at Delta."

For the first nine months of the year, Delta said it lost $4.22 billion, or $21.53 a share, compared to a loss of $2.60 billion, or $17.07 a share, for the same period a year earlier. Nine-month revenue rose 6.3 percent to $13.03 billion from $12.26 billion recorded a year earlier.

Delta ended the quarter with $2.8 billion of unrestricted cash on hand.

Delta has lost more than $16 billion since January 2001. In recent months, it has begun to turn things around thanks to higher revenues, lower labor costs and easing fuel prices. Delta expects to emerge from Chapter 11 by the middle of 2007.

While fuel prices have been falling in recent months, Delta said it spent $1.24 billion on aircraft fuel in the third quarter, a 3.2 percent increase from the $1.20 billion it spent on fuel in the same period a year ago. Bastian said Delta bought fuel hedges for the quarter based on the belief there would be more damaging hurricanes than there actually were, and therefore the price it paid for some of its fuel was higher than market price.

Also Thursday, the company said it would recall 1,000 flight attendants next year to help in part with its international expansion. The company also filed its monthly operating report for September with the bankruptcy court. It reported a net loss of $6 million in the month. Excluding reorganization items, the net loss for the month was $134 million.

Delta reiterated Thursday that it plans to emerge from bankruptcy as a standalone carrier. Bastian also reiterated that Delta has no plans right now to sell subsidiary Comair.

"As long as we're in bankruptcy we expect to hold onto Comair," Bastian said. "Once we emerge, we'll re-evaluate."

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On the Net:

Delta Air Lines Inc.: http://www.delta.com

Source: Associated Press/AP Online

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