Delta financial results

[Dan Roman]

never mind

 

[General Lee]

Airlines Differ on Their Profit Prospects
By MICHELINE MAYNARD -- NY Times
Published: October 15, 2008

Two of the airline industry’s biggest carriers, American and Delta Air Lines, posted third-quarter losses Wednesday. But they gave differing views on what lies ahead for the industry.

Executives at Delta said the drop in oil prices, coupled with steps to cut flights and routes, might protect the nation’s airlines from feeling the brunt of the economic downturn.

But executives at American Airlines warned that fuel prices could be volatile, and that the fallout from the financial turmoil was showing up in weaker bookings from corporate travelers and those in New York.

Delta said that it lost $26 million in the third quarter, excluding special items, mostly because of fuel prices that peaked in July. It earned $220 million a year ago. Delta closed at $7.44, up 1.2 percent.

American, a unit of the AMR Corporation, and the country’s biggest airline, said it lost $360 million, excluding special items, because of fuel costs. It earned $175 million in last year’s quarter. Shares of AMR closed down 1 cent in regular trading, to $8.78.

The nation’s airlines have cut about 13 percent of the flights within the United States in the fourth quarter, or equal to the size of a major airline. Tighter capacity is allowing airlines to raise ticket prices on some routes. At the same time, fuel prices have dropped to $2.58 a gallon compared with a record $3.97 a gallon in July, according to the Energy Department.

Delta said those factors, as well as new fees on various passenger conveniences that were once built into the price of a ticket, have put the airlines in better shape to deal with any drop in demand.

“When you think about what you would rather manage at an airline, you would rather deal with demand cessation than $150 oil,” Richard H. Anderson, the chief executive at Delta, said in a conference call. “In some respects, with fuel dropping the way it’s dropping, we’re somewhat hedged against the economic downturn.”

If current fuel prices remain steady through the quarter, Mr. Anderson said, Delta potentially could earn “a couple hundred million dollars” in profits. “Fuel dropping like a rock is a big offset to the economy,” he said.

But American’s chief executive, Gerard J. Arpey, was more pessimistic. Current oil prices “are not really a bargain by historic standards, and volatility continues to be a concern,” Mr. Arpey said. “We can’t necessarily depend on oil, one way or another.”

Advance bookings for each airline tell a slightly different story. Delta executives said they expected domestic flights to be fuller in November and December than a year ago, in part because of capacity cuts.

But American said it expected planes to be less full on its domestic routes. Both airlines said they were seeing slightly less demand for international flights.

American’s chief financial officer, Thomas W. Horton, said bookings by corporate travelers had dropped in August and September compared with a year ago. Demand out of New York is softening more than elsewhere, something American said it expected.

Meanwhile, American said it had placed orders with Boeing to purchase 42 of its new 787 jets, with options to buy another 58 planes. American joins Northwest Airlines and Continental Airlines as customers for the plane, which is nicknamed the Dreamliner.

The aircraft, suited for long flights, is expected to be 20 percent more fuel efficient than existing long-range jets. However, development of the plane is more than a year behind schedule, and the jet has not yet made its first test flight. Production at Boeing has been halted for more than a month because of a strike by the International Association of Machinists and Aerospace Workers.

In an interview, Mr. Horton said the delays should be well behind Boeing by 2012, when American expects to take delivery on its first planes.

The switch will mean American will operate an all-Boeing fleet, including the MD-80 series jets made by McDonnell Douglas, now part of Boeing. American is in the midst of retiring its Airbus A300 jets.

Mr. Horton said American had not discussed how it would finance the newer planes, but said the airline was making a “very modest” down payment for them.



Bye Bye--General Lee

 

[jetflier]

Fair enough. On the 88, as I said, very rarely have I had to use 2 engines for the weight. Maybe LGA or BOS in the summer and pushing max weight. Even at a pretty high weight I can get it going without tripping the packs. I don't remember having a problem on the DC-9-30. Is the thust/weight ratio on the 40/50 that much worse? What is the engine thrust and max TO weight on the 40 and 50. Thanks!

Series 30: Fuselage of the Series 30 DC-9, actually second developed, is nearly 15 feet longer than the Series 10, at 119.3 feet (36.3 m), providing seats for up to 115 passengers and cargo space to 895 cubic feet (25.3 m3). Series 30 wingspan was increased to 93.3 feet (28.4 m), and a high-lift wing system of leading edge slats gives the Series 30 excellent short-field performance. The first of the type began airline service in February 1967.
Most of the Series 30s are powered by either JT8D-7 or JT8D-9 engines. Others are equipped with JT8D-11 or the JT8D-15, with 15,500 pounds of thrust. The Series 30 is the most widely used member of the DC-9 family, accounting for approximately 60 percent of the entire fleet.
Series 40: To again meet airline demands for a DC-9 with more capacity, the Series 40 was developed with a fuselage length of 125.6 feet (38.3 m). Seating is available for up to 125 passengers, 10 more than the popular Series 30s. Below-floor cargo space totals 1,019 cubic feet (28.8 m3). The Series 40 uses the same wing as the Series 30. Series 40 engines are JT8D-9s, JT8D-11s or JT8D-15s. The model entered service in March 1968.
Series 50: The fifth and largest DC-9 version is extended to 133.6 feet (40.7 m) long, permitting installation of five more rows of seats than the Series 30. Maximum passenger capacity is up to 139, with cargo capacity increased similarly. Wingspan is the same as for the Series 30. Engines are either JT8D-15s or JT8D-17s, which are rated at 16,000 pounds. Airline operations with the Series 50 began in August 1975.


Mike,

Here's the specs, right from the Boeing web-site:

 

[crj567]

"We broadly consider third-quarter industry results to be irrelevant, offering little to no insight as to the industry's 2009 profit potential," said JPMorgan analyst Jamie Baker, in a research note.

Delta said the recent fall in oil prices would save it money, but the outlook for next year was still cloudy. "While near-term demand remains solid, the current economic crisis creates uncertainty about the longer-term revenue outlook," said Delta Chief Financial Officer Edward Bastian, in a statement.

"At the same time, economic concerns have driven the price of fuel down steeply, which will provide significant savings to us."


Bye Bye--General Lee

Blah Blah Blah.....

Should read- European route start decline due to deep prolonged recession. Gen Lee jumps off bridge due to giant dose of reality.


-BK- So nice, we'll try it twice!

 

[400ADude]

Very interesting analogy CRJ567. I wouldn't be suprised to see Delta go bankrupt again either. Time will tell.

 

[ACL65PILOT]

We will either win big or lose big. DAL is making some major changes. They will probably help us, but the future will be the judge.

FWIW, DAL has positioned themselves so that the North Atlantic is not their major international revenue feed. The North Atlantic is not very profitable at present time, but out S.A., Asia, and African destinations are doing quite well.

 

[Dan Roman]

Looking from the sidelines, I'm guessing when the merger goes through the stock will skyrocket.
I base this solely on the fact that AWA/USAir didn't seem like much of a match up and yet their stock went through the roof after the merger. DAL/NWA are much stronger airlines than AWA/USAir.

 

[bravodude]

Airlines Differ on Their Profit Prospects
By MICHELINE MAYNARD -- NY Times
Published: October 15, 2008

Two of the airline industry’s biggest carriers, American and Delta Air Lines, posted third-quarter losses Wednesday. But they gave differing views on what lies ahead for the industry.

Executives at Delta said the drop in oil prices, coupled with steps to cut flights and routes, might protect the nation’s airlines from feeling the brunt of the economic downturn.

But executives at American Airlines warned that fuel prices could be volatile, and that the fallout from the financial turmoil was showing up in weaker bookings from corporate travelers and those in New York.

Delta said that it lost $26 million in the third quarter, excluding special items, mostly because of fuel prices that peaked in July. It earned $220 million a year ago. Delta closed at $7.44, up 1.2 percent.

American, a unit of the AMR Corporation, and the country’s biggest airline, said it lost $360 million, excluding special items, because of fuel costs. It earned $175 million in last year’s quarter. Shares of AMR closed down 1 cent in regular trading, to $8.78.

The nation’s airlines have cut about 13 percent of the flights within the United States in the fourth quarter, or equal to the size of a major airline. Tighter capacity is allowing airlines to raise ticket prices on some routes. At the same time, fuel prices have dropped to $2.58 a gallon compared with a record $3.97 a gallon in July, according to the Energy Department.

Delta said those factors, as well as new fees on various passenger conveniences that were once built into the price of a ticket, have put the airlines in better shape to deal with any drop in demand.

“When you think about what you would rather manage at an airline, you would rather deal with demand cessation than $150 oil,” Richard H. Anderson, the chief executive at Delta, said in a conference call. “In some respects, with fuel dropping the way it’s dropping, we’re somewhat hedged against the economic downturn.”

If current fuel prices remain steady through the quarter, Mr. Anderson said, Delta potentially could earn “a couple hundred million dollars” in profits. “Fuel dropping like a rock is a big offset to the economy,” he said.

But American’s chief executive, Gerard J. Arpey, was more pessimistic. Current oil prices “are not really a bargain by historic standards, and volatility continues to be a concern,” Mr. Arpey said. “We can’t necessarily depend on oil, one way or another.”

Advance bookings for each airline tell a slightly different story. Delta executives said they expected domestic flights to be fuller in November and December than a year ago, in part because of capacity cuts.

But American said it expected planes to be less full on its domestic routes. Both airlines said they were seeing slightly less demand for international flights.

American’s chief financial officer, Thomas W. Horton, said bookings by corporate travelers had dropped in August and September compared with a year ago. Demand out of New York is softening more than elsewhere, something American said it expected.

Meanwhile, American said it had placed orders with Boeing to purchase 42 of its new 787 jets, with options to buy another 58 planes. American joins Northwest Airlines and Continental Airlines as customers for the plane, which is nicknamed the Dreamliner.

The aircraft, suited for long flights, is expected to be 20 percent more fuel efficient than existing long-range jets. However, development of the plane is more than a year behind schedule, and the jet has not yet made its first test flight. Production at Boeing has been halted for more than a month because of a strike by the International Association of Machinists and Aerospace Workers.

In an interview, Mr. Horton said the delays should be well behind Boeing by 2012, when American expects to take delivery on its first planes.

The switch will mean American will operate an all-Boeing fleet, including the MD-80 series jets made by McDonnell Douglas, now part of Boeing. American is in the midst of retiring its Airbus A300 jets.

Mr. Horton said American had not discussed how it would finance the newer planes, but said the airline was making a “very modest” down payment for them.



Bye Bye--General Lee

did you guys show an operatng profit.