Bankrupt Delta Air Lines Still Bedeviled By Fuel

SAN FRANCISCO (AFX) -- Bankrupt Delta Air Lines said Monday that its plan for $5 billion in savings and revenue gains by the end of next year is going as envisioned, but rising jet fuel prices continue to eclipse restructuring efforts.

The Atlanta-based airline said in its Securities and Exchange Commission filing that it has taken steps to get 90% of its $5 billion target so far.

'The benefits we are realizing under our transformation plan are, however, being outpaced and masked by historically high aircraft fuel prices, which are having a material adverse effect on our financial performance,' the company said in a filing.

The filing was delayed after Delta reported its third-quarter results on Thursday. The company lost more than $1 billion in the third quarter.

One of the main culprits: jet fuel.

Fuel spending in 2005 through the end of the third quarter is up 55%, or $1.1 billion, over last year. That's a drain on the company's cash.

Delta is negotiating with its pilots union for $325 million in annual cuts. It has taken asked the judge overseeing its Chapter 11 case to break its union contract. A hearing is set for Nov. 16.

In Monday's filing, Delta said that any kind of strike or labor action would be in violation of the Railway Labor Act.

'If the Bankruptcy Court permits us to reject the collective bargaining agreement, ALPA may seek to initiate a strike or other forms of work disruptions, which we believe would not be permitted under the RLA,' Delta said in the filing.

The carrier filed for bankruptcy on Sept. 14, the same day as Northwest Airlines .

COPYRIGHT

The copying, republication or redistribution of AFX News content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.

News stories provided by third parties are not edited by "Site Publication" staff. For suggestions and comments, please click the Contact link at the bottom of this page.