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Delta's Third-Quarter Loss $1.1B

Posted on: Monday, 14 November 2005, 06:00 CST

By Harry R. Weber

ATLANTA -- Delta Air Lines Inc., which is operating under bankruptcy court protection, blamed high fuel costs Thursday as it reported a wider third-quarter loss of $1.13 billion. The results, announced after the market closed, came despite a solid gain in revenue.

The nation's third-largest carrier also said its pilots are wrong in their contention that nearly $91 million in concessions they are offering is enough to help the struggling carrier return to profitability and compete with discount rivals.

Delta's loss for the three months ending Sept. 30 compared with a loss of $651 million for the same period a year ago. The latest loss includes $4 million in dividends paid out to preferred shareholders.

Excluding one-time reorganization and other special items, Delta said it lost $438 million in the July-September period. That missed the consensus expectations of analysts surveyed by Thomson Financial for a third-quarter loss of $412.5 million.

Revenue in the quarter rose 8.9 percent from the year-ago period to $4.22 billion.

The third-quarter loss brings Delta's red ink to just over $11 billion since January 2001. The airline filed for Chapter 11 protection on Sept. 14 in New York.

Delta's comments about its pilots came a day after the pilots union disclosed in a bankruptcy court filing what it is offering the company in concessions. Delta wants $325 million in concessions from its 6,000 pilots and is asking the bankruptcy court to reject the pilot contract to allow Delta to impose the cuts unilaterally. A showdown in U.S. Bankruptcy Court in New York looms, with a hearing set for Nov. 16 to discuss the company's motion to reject the pilot contract.

In court papers filed Wednesday night, the Air Line Pilots Association said the $90.7 million average annual concessions over four years it has offered Delta is sufficient to help the Atlanta- based company meet its stated goal of reducing its pilot costs per available seat mile.

Company spokesman John Kennedy said Thursday that the union's analysis is flawed. "Therefore, its conclusions are erroneous," he said.

The union has said that, if Delta rejects the pilot contract, that would give pilots the right to strike, and the union warned a walkout would devastate Delta. Kennedy declined to speculate on the possibility of a strike.

Delta has said it believes it will return to profitability two years from now if, among other things, it can get the pilot concessions it is seeking and jet fuel doesn't get more costly.

At a Thursday hearing, bankruptcy judge Prudence Carter Beatty suggested Delta's pilots are overcompensated, saying, "What's really weird is that anyone agreed to pay them that much money to begin with."

In its earnings release, Delta said it ended the quarter with only $1.4 billion in unrestricted cash.

For the first nine months of the year, Delta said it lost $2.60 billion, compared with a loss of $3.01 billion for the same period a year ago. This year's loss includes $15 million in dividends paid out to preferred shareholders. Nine-month revenue was $12.05 billion, compared with $11.36 billion recorded a year ago.

Text of fax box follows:

In court

At a hearing Thursday, bankruptcy court judge Prudence Carter Beatty allowed Delta to abandon leases on nine Boeing 737s and sell a dozen Boeing 767s.

The nine 737s were leased to Delta by Pembroke Capital Aircraft (Shannon) Ltd., which leases two of those planes from C.I.T. Leasing Corp.

So far, Delta has gotten permission to reject leases of about 50 aircraft, bringing it closer to its goal of eliminating 80 planes from its fleet by 2006.

Source: Cincinnati Post

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