Delta reports $6.4 BILLION loss for 1st qtr.

[BILL LUMBERG]

Posted by Tantrum:
"Wait...I think I know what's going on now. The pilot's equity stake in the new company is based on a 3.5% of the value of the new company...DAL and NWA basically just reduced the value of the overall company by about $10 Billion with these moves. So now the equity portion will be based on a $7 Billion company instead of the $17.7 Billion we were hearing before. At least that's my take on it...could be way off, but it does seem odd that only NWA and DAL took this unique writeoff at the exact same time!"

I think Tantrum solved the puzzle. 3.5% of $10B is $350 million in equity that the company no longer passes to the employees. And goodwill is not market cap (although a worse balance sheet will not help the stock), it is basically value placed on the brand name. And with all airlines getting hit hard right now, mgt couldn't have a better time to do a writeoff like this - airline stocks are getting hit anyway so the pain won't be as great for them as it would have been six months ago.

That's a great point..... but isn't the equity share based on the price at the close of the corporate closing?? So the writeoff is for depreciation of assets (i.e. stock) which allows for a favorable tax rate.....just guessing on that one

 

[Jmoney]

General?

General Lee, Paging General Lee!!!

People are bashing you and your airline! Maybe you should step forward to valiantly defend your "inspired managment."

Maybe you, the all-seeing all-knowing poop of the world can enlighten us lesser mortals as to how this can happen to you and your "inspired leaders."

How many billion? No, seriously, General! Billion? Really? "Goodwill write-offs." Yep, if by "goodwill" they mean sucking a shotgun barrel like Kurt Cobain, I guess I could see that point.

Come on, Gen! we are awaiting your inspired response with baited breath!

-Come try and "spin" this one.
-Or just "sit and spin"

-Matters not to me, toobag!

-P.S.- See all my previous posts regarding yourself and "bad ju-ju." Maybe you will get the point

 

[ultrarunner]

BILLION? One time charge? Huh?


here's the spin: excluding special one-time charges they only lost 274 million

NWA release is next ...

Ok, lets give DAL the benefit of no more "one time charges' related to reduced market cap (riiiight).

With that said, has anyone done the math on how many more quarters DAL can tolerate quarter BILLION dollar losses without going out of business or declaring BK?

I can't imagine the General doesn't have those numbers at the ready.

 

[Noserider76]

DL's guidance says + 3-5% operating margin in Q-2. Operating profit should be in that range unless fuel is significantly higher than current price. 49%+ fuel hedged at 2.79/gal.

For the record DL guidance was good for Q-1. Q-1 2008 guidance was for an operating margin of minus 2-4%. Came in at minus 3.3% for an operating loss of 161 mil plus special items (274 mil).

 

[Max Powers]

Well DAL and NWA stock is up on that news so it can't be that bad

 

[DTW320]

Operating loss is the number that matters. DAL and NWA's combined operating loss was still $100Million less than UAL's. Not saying it doesn't suck, but is relatively better than others.

 

[BOX OFFICE]

$3.9 Billion Non-cash, Non-recurring Accounting Charge Taken to Reduce Goodwill
The Company is required for accounting purposes to measure the value of goodwill annually or whenever significant events that could be indicators of a change in value have occurred. In completing our first quarter evaluation, we considered the impact of current high fuel prices, Northwest's recent stock price, other industry trends and the equity value of Northwest implied by the recent merger announcement and have determined that an impairment to goodwill is required. To make this determination, the Company compared the carrying value of its equity to its fair value. For purposes of this evaluation, fair value has been determined based on the implied market value of Northwest's equity in the announced transaction. As a result of this evaluation, the Company recorded a non-cash goodwill impairment charge of $3.9 billion.

In other words, Delta and Northwest are crying poor to facilitate public and regulatory sympathy and facilitate the merger. Report obscene losses on top of mediocre losses to make the merger seem really necessary when John Q Public watches the Evening News.

Did anyone really not see this coming? And do they think everyone is too stupid to see through it? Delta and Northwest are famous for cooking the books up to serve whatever purpose they have in mind. The bankruptcies (ironically on the same day!) were a prime example.

Don't believe the hype. The real losses were the smaller figures. Which are well in line with the other airlines.

 

[taiar]

Wake up in the morning ...HEADLINES and Breaking NEWS DELTA loss = $6.1 BILLION....


Everyone sells stocks.... pre trading Delta stock takes a hit.... just before the opening bell Delta and analysts clarify that its really only a $274 loss.... all of a sudden it don't seem that bad no more, and stock bounces back up and does not Tank... as it would have if they would have just announced from the get go a $274 loss...... $6.1 Billion vs $274 Mill.

UAL stock dropped almost $6 a share when they announced there Q1 results... ..... However DAL has only dropped about a $1.... the $6.1 Billion soften the blow.... smart financial strategy..

my 2 cents... for what ever its worth or not...

 

[Mr.B]

Wake up in the morning ...HEADLINES and Breaking NEWS DELTA loss = $6.1 BILLION....


Everyone sells stocks.... pre trading Delta stock takes a hit.... just before the opening bell Delta and analysts clarify that its really only a $274 loss.... all of a sudden it don't seem that bad no more, and stock bounces back up and does not Tank... as it would have if they would have just announced from the get go a $274 loss...... $6.1 Billion vs $274 Mill.

UAL stock dropped almost $6 a share when they announced there Q1 results... ..... However DAL has only dropped about a $1.... the $6.1 Billion soften the blow.... smart financial strategy..

my 2 cents... for what ever its worth or not...

Subtract the 250M dividend payout UAL robber-barons basically gave themselves, and the UAL/DL loss is basically the same.

 

[General Lee]

Yeah really. After the General gets done playing broke back mountain with the CEO he will chime in with some good BS.

What a complete tool. Hillarious. Anyway, the right down was an accounting tool that both DL and NWA used. Funny how that happens, eh? The actual loss was $274 million, which isn't great, but not as bad as UAL's, and hopefully the busy Summer season will help. Other airlines will start falling by the wayside anyway. A DL/NWA combo will have $7 billion in cash, which will help weather the storm.


Bye Bye--General Lee

 

[Noserider76]

In other words, Delta and Northwest are crying poor to facilitate public and regulatory sympathy and facilitate the merger. Report obscene losses on top of mediocre losses to make the merger seem really necessary when John Q Public watches the Evening News.

Did anyone really not see this coming? And do they think everyone is too stupid to see through it? Delta and Northwest are famous for cooking the books up to serve whatever purpose they have in mind. The bankruptcies (ironically on the same day!) were a prime example.

Don't believe the hype. The real losses were the smaller figures. Which are well in line with the other airlines.

I don't think they need to cook the books to get the merger approved. US carriers are getting killed by the ultra-weak dollar (= record fuel prices in $). Large international carriers are getting stronger as their currency appreciates via the dollar. Consolidation will probably have to happen if we want US airlines to compete in the international market. These large goodwill write downs are just pre-merger house cleaning.

 

[Tanker1497]

Hey SFR, interesting post....

"How can 2 obviously terrible companies like DAL and NWA possibly merge? It is like the blind leading the blind.

They have no business being in this business."

So in your opinion, who exactly does have any business being in this business? It looks as if all pax carriers, save Southwest, will be in the red for this quarter. Just curious, what airline do you work for, because I'm sure they have "business being in this business."?

 

[jehtplane]

What a complete tool. Hillarious. Anyway, the right down was an accounting tool that both DL and NWA used. Funny how that happens, eh? The actual loss was $274 million, which isn't great, but not as bad as UAL's, and hopefully the busy Summer season will help. Other airlines will start falling by the wayside anyway. A DL/NWA combo will have $7 billion in cash, which will help weather the storm.


Bye Bye--General Lee

I rest my case, I'd swear you sit in front of a picture of a Delta Widget and diddle yourself!!!

 

[SWA/FO]

Other airlines will start falling by the wayside anyway. A DL/NWA combo will have $7 billion in cash, which will help weather the storm.

Yeah, that will buy DL/NWA a qtr and a half.

 

[Bake]

General, I'm pretty sure houses in LBB are about 70 dollars a square foot. Just a thought.