General Lee
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Delta Loss Narrows, But Hurdles Remain
Wednesday January 14, 9:28 am ET
By Meredith Grossman Dubner
CHICAGO (Reuters) - Delta Air Lines (NYSE: DAL - News), on Wednesday reported a narrower fourth-quarter net loss as revenues edged higher and it cut costs, but the carrier called the results disappointing and said it still faces many hurdles.
Squeezed by high costs and stubbornly weak demand, the No. 3 U.S. carrier has a new chief executive and is in the midst of contract talks with its pilots' union in an effort to further reduce costs.
The Atlanta-based carrier, the first major airline to report results for the last quarter of the year, posted a loss of $327 million, or $2.69 per share, for the fourth quarter. A year earlier, Delta reported a loss of $363 million, or $2.98 per share.
Revenue rose to $3.40 billion from $3.31 billion a year earlier.
The latest quarter included an after-tax charge of $134 million related to pilot pension plans. Delta had said in November that non-cash charges related to pilot retirements would increase its expected loss.
"Today's financial results are disappointing, especially given the expected performance of the other air carriers," Chief Executive Gerald Grinstein said in a statement. "2003 was a year full of significant financial challenges for Delta. While we have made progress in addressing these challenges, Delta still faces many hurdles in 2004."
Excluding the charge for the pension costs and other unusual items, Delta reported a loss of $207 million, or $1.71 a share.
Wall Street analysts on average had expected Delta to post a loss of $1.65 per share, with loss estimates ranging from $1.54 to $1.85 a share, according to Reuters Research, a unit of Reuters Group Plc.
Grinstein, who took over as CEO on Jan. 1, said the airline has begun a complete reassessment of its business -- including its approach to executive pay -- to ensure it remains competitive in a rapidly changing industry environment. As part of that review, Delta did not give top executives cash bonuses for 2003.
Grinstein replaced former CEO Leo Mullin, who unexpectedly announced his retirement in November after taking heat from workers and shareholders for his compensation.
Delta said it cut costs by about $1.2 billion in 2003, but the actual benefit of those cuts was only about $700 million because some costs rose. The carrier said the cost cuts largely reflected greater productivity among employees and increased use of technology.
Delta has asked its 8,500 pilots, its only major unionized group, to take paycuts of 22 percent and forfeit 2003 and 2004 raises of 4.5 percent each. Pilots offered in December to take 9-percent paycuts.
Delta said it ended the quarter with $2.9 billion in cash, including $2.7 billion in unrestricted cash.
Delta shares lost 11 percent in the fourth quarter and 2 percent in 2003. They closed at $12.14 on the New York Stock Exchange (News - Websites) on Tuesday, down 37 cents.
So there still was a loss, but it was better than last year. Apparently there was $207 million loss for the quarter, plus extras like a pension payment and other items. But, we still have the same amount of cash on hand---$2.9 billion with $2.7 of that unrestricted. And, it has the pilots in there---with our 9% offer (even though they forget to say that we also offered the 4.5% raise due in May--which would total 13.5% from the current contract). What is my take? We do need to give them some paycuts of some sort--which would help the overall picture.(I bet it will turn out to be around 15% plus the 4.5% raise, but that is a guess) I think that is why Dalpa hired an investment bank to look into the problems and come up with a solution. Now, let's hope we get some progress this year and it is a better year for everyone. 2004 has GOT TO BE a better year than 2003. (I hope so)
Bye Bye--General Lee
Wednesday January 14, 9:28 am ET
By Meredith Grossman Dubner
CHICAGO (Reuters) - Delta Air Lines (NYSE: DAL - News), on Wednesday reported a narrower fourth-quarter net loss as revenues edged higher and it cut costs, but the carrier called the results disappointing and said it still faces many hurdles.
Squeezed by high costs and stubbornly weak demand, the No. 3 U.S. carrier has a new chief executive and is in the midst of contract talks with its pilots' union in an effort to further reduce costs.
The Atlanta-based carrier, the first major airline to report results for the last quarter of the year, posted a loss of $327 million, or $2.69 per share, for the fourth quarter. A year earlier, Delta reported a loss of $363 million, or $2.98 per share.
Revenue rose to $3.40 billion from $3.31 billion a year earlier.
The latest quarter included an after-tax charge of $134 million related to pilot pension plans. Delta had said in November that non-cash charges related to pilot retirements would increase its expected loss.
"Today's financial results are disappointing, especially given the expected performance of the other air carriers," Chief Executive Gerald Grinstein said in a statement. "2003 was a year full of significant financial challenges for Delta. While we have made progress in addressing these challenges, Delta still faces many hurdles in 2004."
Excluding the charge for the pension costs and other unusual items, Delta reported a loss of $207 million, or $1.71 a share.
Wall Street analysts on average had expected Delta to post a loss of $1.65 per share, with loss estimates ranging from $1.54 to $1.85 a share, according to Reuters Research, a unit of Reuters Group Plc.
Grinstein, who took over as CEO on Jan. 1, said the airline has begun a complete reassessment of its business -- including its approach to executive pay -- to ensure it remains competitive in a rapidly changing industry environment. As part of that review, Delta did not give top executives cash bonuses for 2003.
Grinstein replaced former CEO Leo Mullin, who unexpectedly announced his retirement in November after taking heat from workers and shareholders for his compensation.
Delta said it cut costs by about $1.2 billion in 2003, but the actual benefit of those cuts was only about $700 million because some costs rose. The carrier said the cost cuts largely reflected greater productivity among employees and increased use of technology.
Delta has asked its 8,500 pilots, its only major unionized group, to take paycuts of 22 percent and forfeit 2003 and 2004 raises of 4.5 percent each. Pilots offered in December to take 9-percent paycuts.
Delta said it ended the quarter with $2.9 billion in cash, including $2.7 billion in unrestricted cash.
Delta shares lost 11 percent in the fourth quarter and 2 percent in 2003. They closed at $12.14 on the New York Stock Exchange (News - Websites) on Tuesday, down 37 cents.
So there still was a loss, but it was better than last year. Apparently there was $207 million loss for the quarter, plus extras like a pension payment and other items. But, we still have the same amount of cash on hand---$2.9 billion with $2.7 of that unrestricted. And, it has the pilots in there---with our 9% offer (even though they forget to say that we also offered the 4.5% raise due in May--which would total 13.5% from the current contract). What is my take? We do need to give them some paycuts of some sort--which would help the overall picture.(I bet it will turn out to be around 15% plus the 4.5% raise, but that is a guess) I think that is why Dalpa hired an investment bank to look into the problems and come up with a solution. Now, let's hope we get some progress this year and it is a better year for everyone. 2004 has GOT TO BE a better year than 2003. (I hope so)
Bye Bye--General Lee
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