General Lee
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Delta eyes asset sales, sees fuel 'tipping point'
Fri May 13, 2005 10:43 AM ET
NEW YORK, May 13 (Reuters) - Delta Air Lines Inc. (DAL.N: Quote, Profile, Research) is eyeing asset sales and new ways of borrowing more money as it seeks to preserve cash, its chief financial officer said on Friday, as speculation about a bankruptcy dogs the airline.
"Delta is not failing to plan, and we are certainly not planning to fail," Michael Palumbo told an analyst conference. "We're looking at non-core assets and the overall efficiency of the leveraging of the collateral we have in place."
The No. 3 U.S. carrier is widely seen as the most likely to file for bankruptcy in an industry hurt by high fuel prices and competition from low-cost airlines, though it could sell assets including its Comair and Atlantic Southeast Airlines regional carriers.
Delta's shares were down 4 cents, or 1.4 percent, at $2.73 in morning trading on the New York Stock Exchange, just off all-time lows touched earlier this week. On Tuesday, the airline said it would not generate enough cash to meet its needs this year.
Brokerage Raymond James Friday cut its rating on shares in Delta regional partner Skywest Inc. (SWYW.O: Quote, Profile, Research) to "market perform" from "outperform," citing the increased risk of a Delta bankruptcy filing before the end of the year.
CFO Palumbo said Delta was striving to avoid bankruptcy by executing on a plan that aims for $5 billion in cost cuts and revenue enhancements by the end of next year, but did not rule out following rivals United Airlines Inc. (UALAQ.OB: Quote, Profile, Research) and US Airways Group Inc. (UAIRQ.OB: Quote, Profile, Research) into Chapter 11.
"We have a plan that is designed to be executed outside of the statutory process, and we are executing that plan," he said.
Commenting on the record fuel prices that have roiled the airline industry, Palumbo added that he believes there is a "tipping point" at about $45 a barrel, beyond which no airline including Delta could make money.
But Delta's business plan would allow it to eventually turn a profit at $40 to $45 a barrel, he said. U.S. crude oil futures on Friday fell 59 cents to just under $48 a barrel, a three-month low. Delta is not counting on lower fuel prices, though, and is "implementing plans to dig deeper" to find additional cost cuts, Palumbo said.
Hmmmm. Sounds like they want to retain control of the airline..... Let's hope they have a plan that works.
Bye Bye--General Lee
Fri May 13, 2005 10:43 AM ET
NEW YORK, May 13 (Reuters) - Delta Air Lines Inc. (DAL.N: Quote, Profile, Research) is eyeing asset sales and new ways of borrowing more money as it seeks to preserve cash, its chief financial officer said on Friday, as speculation about a bankruptcy dogs the airline.
"Delta is not failing to plan, and we are certainly not planning to fail," Michael Palumbo told an analyst conference. "We're looking at non-core assets and the overall efficiency of the leveraging of the collateral we have in place."
The No. 3 U.S. carrier is widely seen as the most likely to file for bankruptcy in an industry hurt by high fuel prices and competition from low-cost airlines, though it could sell assets including its Comair and Atlantic Southeast Airlines regional carriers.
Delta's shares were down 4 cents, or 1.4 percent, at $2.73 in morning trading on the New York Stock Exchange, just off all-time lows touched earlier this week. On Tuesday, the airline said it would not generate enough cash to meet its needs this year.
Brokerage Raymond James Friday cut its rating on shares in Delta regional partner Skywest Inc. (SWYW.O: Quote, Profile, Research) to "market perform" from "outperform," citing the increased risk of a Delta bankruptcy filing before the end of the year.
CFO Palumbo said Delta was striving to avoid bankruptcy by executing on a plan that aims for $5 billion in cost cuts and revenue enhancements by the end of next year, but did not rule out following rivals United Airlines Inc. (UALAQ.OB: Quote, Profile, Research) and US Airways Group Inc. (UAIRQ.OB: Quote, Profile, Research) into Chapter 11.
"We have a plan that is designed to be executed outside of the statutory process, and we are executing that plan," he said.
Commenting on the record fuel prices that have roiled the airline industry, Palumbo added that he believes there is a "tipping point" at about $45 a barrel, beyond which no airline including Delta could make money.
But Delta's business plan would allow it to eventually turn a profit at $40 to $45 a barrel, he said. U.S. crude oil futures on Friday fell 59 cents to just under $48 a barrel, a three-month low. Delta is not counting on lower fuel prices, though, and is "implementing plans to dig deeper" to find additional cost cuts, Palumbo said.
Hmmmm. Sounds like they want to retain control of the airline..... Let's hope they have a plan that works.
Bye Bye--General Lee
