Delta Back in the Black

Delta Air Lines recorded its first monthly profit since filing for bankruptcy nearly a year ago, boosting its bottom line by $69 million in July.

Those positive results marked a significant improvement over a $41 million loss during the same month in 2005 and provided Delta with a welcome bright spot in an otherwise bleak week. Investigators continue their probe of Sunday's crash of Comair Flight 5191, in which 49 people were killed after a regional jet operated by the Delta subsidiary took off from the wrong runway in Lexington, Ky.

The Atlanta carrier has been edging toward a profit in recent months, excluding huge noncash accounting charges --- some of which are related to the bankruptcy filing --- that sometimes caused its bottom line to rise and fall dramatically. But July was the first month that Delta reported a profit while including such one-time charges.

Rising fares and savings from its bankruptcy restructuring efforts have helped offset high jet fuel prices that are typically its second-biggest expense, after labor.

Airline analyst Ray Neidl said Delta will most likely stay in positive territory in coming months because its turnaround efforts are yielding dividends and industry revenues are strong.

"The industry's making money. Delta was expected to make money," said the Calyon Securities analyst. "They've got some cost-cutting in place."

However, a Delta executive warned that a seasonal drop in travel demand this fall could make it more difficult for the airline to continue its climb.

"July's results reflect the continued momentum of our restructuring," Delta financial chief Ed Bastian said in a written statement. "In the coming months, the challenge will be to sustain this momentum as we move into a traditionally slower season for our industry."

Airlines typically post their best results in the summer, when vacationers pack planes. Delta said this month that it sold a record-high percentage of available seats in July --- more than 85 percent --- even though overall passenger traffic fell compared to last year. Significant capacity cuts at Delta and other retrenching carriers this year also helped boost fares and cut costs as they grounded their least fuel-efficient jets.

As a result, industry analysts are expecting this year to be one of the best for airlines in years. Neidl recently forecast that U.S. airlines would report a $1.7 billion profit this year, after years of heavy losses.

Delta said this month that it lost $2.2 billion in the second quarter ending in June, but that included $2.4 billion in noncash restructuring charges, mostly tied to a deal in which its pilots' union agreed not to oppose the termination of their pension plan. Excluding those charges, Delta said it earned its first quarterly profit in more than five years.

The monthly figures were filed Wednesday in the bankruptcy court that has been supervising Delta's restructuring since last September. The court, in White Plains, N.Y., will be the venue for a hearing scheduled to begin Friday on Delta's motion to shed the pilots' deeply underfunded pension plan.

Delta said shifting responsibility for the pilots' plan to the Pension Benefit Guaranty Corp. is essential to its plans to emerge from bankruptcy by next summer.

The quasi-federal agency, which insures benefits for people in plans that are terminated, has not filed an objection. However, a retired pilot group and several individual pilots oppose the move.

In its monthly operating report, Delta also showed that it continued to pad its cash, another sign of its improving financial health. Delta said its reserves in July rose to $3 billion in unrestricted cash and short-term investments, from $2.9 billion at the end of June.

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