Delta Air Lines Reports $1.96 Bln Loss

[Flying Freddie]

Reuters
Delta Air Lines Reports $1.96 Bln Loss
Monday July 19, 11:11 am ET

CHICAGO (Reuters) - Delta Air Lines (NYSE:DAL - News), struggling to secure major cost cuts to avoid a possible bankruptcy, on Monday posted a quarterly loss after a hefty one-time government aid payment helped it post a profit a year earlier.

The Atlanta-based No. 3 U.S. carrier said its second-quarter loss amounted to $1.96 billion, or $15.79 a share, including a big noncash charge. A year earlier, it reported a profit of $184 million, or $1.40 a share.

Without the federal aid, Delta's year-ago loss was $237 million, or $1.95 a share.

 

[lowecur]

Actually, $312M or $2.55 per share. The one time charges are paper only. Sure makes NWA's business model look much better than DL's, considering that pilot pay is pretty close. Bad Mgt decisions? It's more likely that NWA just hasn't had the LCC competition that DL has had. That will not be true in the next 5 years. Analysts were estimating around $1.90 per share, so this is a surprise. I think Independence Air will have a bigger effect on DL's and UAIR's pricing power in the 3rd Q.

Cash stands at $2.3B, with $2B as unrestricted. This is historically the best Q for airlines, so DL's unrestricted cash position could shrink close to $1.5B by the end of the 3rd Q. Here's an "paid" analysts thoughts:


"We think the risk of Delta filing for Chapter 11 has substantially increased, particularly with fuel continuing to hover near peak levels," wrote McKenzie in his research note at the time. "Despite encouraging news from the Delta pilots union on concessions, we think labor uncertainty increases for Delta following the UAL loan guarantee denial." (Citigroup Smith Barney does and seeks to do business with the companies covered in its research reports.)

"We're concerned that the labor battle with Delta's pilots will prove too difficult," said McKenzie, adding later, "Delta is now seeking $1 billion in savings from the pilots, vs. management's previous request for savings of approximately $850 million, according to our labor sources ... Ultimately, we think the sacrifice asked of the pilots will be too tough a pill to swallow." Prior to Delta's second-quarter report, analysts were forecasting a net loss of $1.23 billion, or $11.06 a share, on revenue of $14.52 billion for full-year 2004.

 

[MLBWINGBORN]

I wonder how the 1064 guys that are supposed to coming back see this?
Hey General!Whats the latest on training and manning?
Ive heard that as many as 500 of the top guys may bail over fears of BK..Taking the lump sum before anything else happens..

Thats gotta create havoc with schedules and training..

Mike

 

[michael707767]

I wonder how the 1064 guys that are supposed to coming back see this?
Hey General!Whats the latest on training and manning?
Ive heard that as many as 500 of the top guys may bail over fears of BK..Taking the lump sum before anything else happens..

Thats gotta create havoc with schedules and training..

Mike

I have heard there are 400-500 guys who have their 25 years and are over 55. No idea on how many may actually go, but a lot of the captains I fly with are definately thinking about it, keeping a watchful eye on things. Would not surprise me to see another 200-300 head out soon.

 

[MLBWINGBORN]

Man..

I would love to sit in on a training planning meeting right now..
Those poor guys must be pulling out their hair..

Mike

 

[General Lee]

Lowecur,


Yes, I just saw this (just got back from another long trip....) and the analysts seem to be going back and forth. Good ole Ray Neidel said we had a 1 in 4 chance of Chap 11. Who knows? I think we will have a deal soon with the pilots, and a lot of this media stuff is helping put pressure on the creditors and vendors etc... I think that is the point. Also, the other employee groups will probably get squeezed too for some extra cash. I have also heard that we still have near 500 guys with 25 years at Delta that could go---which is fine with me if they want to...

Bye Bye--General Lee

 

[AAflyer]

In all the noise did anyone notice that Delta paid out 50 million in dividends to "preferred shareholders". Wonder just who those "preferred" shareholders are?

Delta had around 2.2 Billion in unrestricted cash last year and now about 2.0 Billion.

Knowing many take the media at face value, wanting pilot cuts, what a great time for DAL to show a tremendous loss (even though 1.5 Billion is really a paper loss).

Just like management, the media always puts a spin on things, and now more than ever you have to go dig for the reality in the details.

AA

 

[General Lee]

You're right, looking at the initial number (near $2 billion)---I almost flipped out of my chair. But, the one time charges are still around (I guess---I thought they ran out of those...?). Is the busy Summer time quarter the third quarter? I can't remember. We have been jam packed--but I know--that doesn't mean profits.... It sure would be nice if we could raise fares a bit---but them they wouldn't have to ask for $1 billion a year in pilot pay cuts......It's all our fault--AGAIN.


Bye Bye--General Lee

 

[festus]

In order to get the lump sum, how far ahead of time do senior pilots have to put in paperwork for retirement?

 

[bafanguy]

24 hours !!!

 

[bafanguy]

General Lee,


Speaking of retirements...I know how many guys went June 1st...how many went July 1st, and how many were "earlies" ?

You junior birdmen must be skyrocketing up the system list...

 

[General Lee]

bafanguy,


I believe close to 100 left July 1st---and I think 60-70 were earlies. But, that Gatt rate is actually going down again (slightly)--which could entice more people to leave Aug 1st..... I know some of the latest media reports have enticed a few to go, and a 30% or more pay cuts will cause more to leave I am sure....

Thank you for your contribution....

Bye Bye--General Lee

 

[bafanguy]

GL,


I'm always willing to contribute.

P.S. What did I contribute...and is it tax deductible ?

 

[General Lee]

If we offered to pay early retirement COBRA for early out Capts--would more go? I'd do it...


Bye Bye--General Lee

 

[bafanguy]

GL,


You'd be killed in the stampede for the door. To get UHC, that cr@ppy excuse for health insurance, and comprehensive dental for the family was $816/mo for an early-out guy and the DPMP was $1037/mo. If Dreamdate wasn't a DL FA who could support me in the manner to which I'd become accustomed, I'd still be out there impeding the career progression of all junior birdmen because I couldn't have afforded to go early ( and I don't owe anybody on this planet or any other so much as a friggin' NICKEL ).

 

[lowecur]

Lowecur,


Yes, I just saw this (just got back from another long trip....) and the analysts seem to be going back and forth. Good ole Ray Neidel said we had a 1 in 4 chance of Chap 11. Who knows? I think we will have a deal soon with the pilots, and a lot of this media stuff is helping put pressure on the creditors and vendors etc... I think that is the point. Also, the other employee groups will probably get squeezed too for some extra cash. I have also heard that we still have near 500 guys with 25 years at Delta that could go---which is fine with me if they want to...

Bye Bye--General Lee

Union Rep states proposal will go to DL shortly. Sounds like things are speeding up. Still don't think Pilot's will go for $1B, and I think Greenjeans will hold your feet to the fire on that. It's his excuse for filing 11. Hope I'm wrong.

 

[swaforme]

OK, I'm pretty lost when it comes to this one time non-cash charge stuff. But over a billion in non cash charge. What the heck does that mean?


Thanks

 

[AAflyer]

Since analysts are as reliable as weather reporters one must go find the numbers himself.

Here are some interesting stats on DL.

A little preliminary analysis of Delta's 2nd qrtr:
mainline regional regional as % of main
aircraft 550 292 53 %
june of 2003 551 265 48.1 %
ASMs/acft(mil) 60.36 18.57 30.1 %
2003 ASM/acft 51.9 17.5 33.7%
improvement 16.3% 6.1% -2.6 points
revenue/acft 5.82(mil) 2.60 44.7 %
2003 rev/acft 5.14 2.11 48.4 %
improvement 13.2% 4.0% -3.7 points

Capital expenditures (2nd quarter)
104 million for 4 regional jets
160 million for "flight equipment"
111 million for "ground property and equipment"
Mainline ASMs up 16 percent with one less airplane than 2003
Regional ASMs up 16 percent with 27 more airplanes than 2003.
Mainline load factor appears saturated at 77 percent.


AA
Sorry, tried to seperate the data into columns and it kept putting it together.

 

[MedFlyer]

Mainline ASMs up 16 percent with one less airplane than 2003
Regional ASMs up 16 percent with 27 more airplanes than 2003.

One little problem with your numbers, many of the mainline planes were sitting in the desert last year at this time. If you were to compare the number of ACTIVE mainline planes between last year and this year, the comparison would be far less striking.

I will agree that DL could do more to increase RJ utilization. Hopefully when/if DL restructures, they will work to improve RJ utilization as well as mainline.

 

[DenverDude2002]

Isnt Grimstein going to be going to be releasing his "master plan" in august? wonder how this will affect it and and lets hope DL pulls through this, I'd hate to have them go.

Hopefully I'll get to fly on DL in august.........