Delta Posts $2.2 Billion Loss in 2Q

Aug. 10, 2006
The nation's third-largest carrier reported Wednesday that huge reorganization fees gave Delta a $2.21 billion net loss on paper.

With higher ticket prices and fuller planes driving up revenue, Delta Air Lines Inc. said it turned its first adjusted profit in nearly six years during the second quarter.

The nation's third-largest carrier reported Wednesday that huge reorganization fees gave Delta a $2.21 billion net loss on paper, but Chief Financial Officer Ed Bastian described that as "pure bookkeeping."

Bastian said he is mostly encouraged by what he sees in Delta's progress toward recovery since its Chapter 11 bankruptcy court filing in September 2005.

"We are running on plan in a number of areas," Bastian said. "Revenue is doing better than plan."

Revenue in the second quarter rose 9.6 percent to $4.66 billion from $4.25 billion recorded the same period a year ago.

For the three months ended June 30, Atlanta-based Delta said its net loss amounted to $11.18 a share, compared with a loss of $388 million, or $2.64 a share, in the second quarter a year ago. The prior-year loss included $6 million in dividends that accrued for preferred shareholders.

Excluding reorganization items, the airline said it earned $175 million in the second quarter after accounting for a $4 million tax charge. Delta last reported an adjusted profit in the fourth quarter of 2000, when it had income of $79 million before special items.

In a telephone interview, Bastian said that while Delta is "encouraged by the progress, we'll obviously be tested in the softer travel season in the fall."

Several major airlines, including Delta, are offering fare sales for travel in the fall to keep seats filled.

Delta said its fuel expense rose to $1.02 billion in the second quarter from $881 million in the same period a year ago.

Delta also Wednesday filed in bankruptcy court its monthly operating report for June, which showed that it lost $2.2 billion in the month. Excluding reorganization items, Delta said it had net income of $145 million in June.

For the first six months of the year, Delta said it lost $4.28 billion, or $21.86 a share, compared with a loss of $1.46 billion, or $10.17 a share, in the same period a year ago. Six-month revenue rose to $8.37 billion from $7.96 billion recorded in the same period a year ago.

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

As of June 30, Delta had $4 billion in cash, of which $2.9 billion was unrestricted or available for immediate use.

Going forward, Bastian said Delta is committed to emerging from bankruptcy as a standalone carrier.

Asked about the airline's plans regarding a merger after it emerges from bankruptcy, Bastian said, "Who knows? I don't see it anytime post-bankruptcy in the foreseeable future, certainly not for Delta."

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