Delta's Loss Narrows; Others Post Profits

Delta's ability to stay out of bankruptcy grew even more uncertain Thursday as the nation's third-largest airline posted a $388 million second-quarter loss.

ATLANTA (AP) -- Delta's ability to stay out of bankruptcy grew even more uncertain Thursday as the nation's third-largest airline posted a $388 million second-quarter loss to push its red ink to just under $10 billion since early 2001.

''There are some things beyond our control,'' chief executive Gerald Grinstein said, citing fuel and pension costs.

He said Delta will review those items in determining its future course. Fitch Ratings airline analyst Bill Warlick said Atlanta-based Delta will be forced into Chapter 11 if Congress doesn't enact meaningful pension reform by the fall.

''There are variables that could change between now and the fall, but clearly they're running out of time,'' Warlick said.

Meanwhile, discount airline JetBlue and the parent companies of regional carriers America West, Alaska Airlines and Horizon Air all reported small profits Thursday, a positive sign in an industry racked by persistently high fuel prices.

Delta said it spent $1.05 billion on fuel in the quarter, 57.5 percent more than it spent in the same period a year ago.

The company's results beat Wall Street expectations, but Delta Air Lines Inc. shares fell 31 cents, or 7.9 percent, to $3.60 in afternoon trading on the New York Stock Exchange. The airline said its unrestricted cash reserves fell to $1.7 billion at the end of the second quarter, compared to the $1.8 billion it had at the end of the first quarter.

Delta's loss for the three months ending June 30 was equivalent to $2.64 a share, compared to a loss of $1.97 billion, or $15.70 a share, in the same period a year ago. The latest loss includes $6 million in dividends paid out to preferred shareholders.

Excluding one-time items, Delta said it lost $304 million, or $2.11 a share. On that basis, analysts surveyed by Thomson Financial were expecting a loss of $2.37 a share.

Revenue in the April-June quarter rose 5.7 percent to $4.19 billion, compared to $3.96 billion recorded a year ago.

''Record-high fuel prices and other factors out of our control during the quarter outpaced our transformation initiatives and masked our progress,'' Grinstein said. ''Our management team recognizes that further change is essential - and it must be implemented with even greater speed - if we are to achieve our goals in the increasingly competitive aviation marketplace.''

The company is trying to avoid a bankruptcy filing, but has conceded at various points over the last few months that it may not be able to.

Delta said it plans to remove up to 14 mainline aircraft from service during the final six months of the year.

On Wednesday, Delta abruptly replaced its chief financial officer and made other executive changes as it prepared to record the hefty loss Thursday.

The departure of Michael Palumbo, the second CFO to leave Delta in 14 months, was announced as the airline said there is growing urgency to its transformation efforts.

Despite the management shuffle, Grinstein said Thursday it's not a suggestion that bankruptcy is imminent.

''I wouldn't read anything into Michael's departure on that score,'' the CEO said.

Even so, Warlick, the Fitch analyst in Chicago, said the executive exodus at Delta raises concerns.

''Anytime you have turnover in senior management, it could be disruptive and possibly force them to take their eye off the ball,'' Warlick said.

Delta lost $1.46 billion, or $10.17 a share, for the first six months of the year, compared to a loss of $2.36 billion, or $18.95 a share, a year ago. Six-month revenue was $7.83 billion, compared to $7.49 billion a year ago.

Also Thursday, Forest Hills, N.Y.-based JetBlue Airways Corp. reported a second-quarter profit of $12.2 million, or 11 cents per share. That's 43 percent lower than a year ago, but matched Wall Street expectations. Seattle-based Alaska Air Group Inc., the parent company of Alaska Airlines and Horizon Air, swung to a quarterly profit of $17.4 million, or 56 cents a share, while Tempe, Ariz.-based America West Holdings Corp. reported a wider profit of $13.9 million, or 29 cents per share, for the second quarter.

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