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Delta to Deepen Seat Cuts as Fuel Hits Profits

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DieselDragRacer

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Joined
Apr 30, 2006
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Delta Air Lines Inc. (DAL), the world’s second-largest airline, plans further seating-capacity cuts after higher fuel and maintenance costs pulled second-quarter profit below analysts’ estimates.

Profit excluding certain items was $366 million, or 43 cents a share, the Atlanta-based carrier said today in a statement. That lagged behind the 44-cent average estimate from 13 analysts in a Bloomberg survey. Revenue rose 12 percent to $9.15 billion, compareed with the $9.14 billion projection.

Delta’s jet fuel bill jumped by about $1 billion, an increase of about 39 percent from a year earlier, and aircraft maintenance and payments to regional partners also rose. Delta said it will cut capacity by as much as 5 percent after the peak summer travel season ends to further reduce costs, up from a previous plan of 4 percent.

“High fuel prices are putting significant pressure on the industry,” Chief Executive Officer Richard Anderson said in the statement.

More than 2,000 employees accepted voluntary buyout and early retirement offers, most of them hourly workers, said Eric Torbenson, a spokesman for the carrier. That’s about 3 percent of the company’s workforce of 80,000.

Including $168 million in one-time items for the severance payments, retiring 140 older less-efficient aircraft and consolidating facilities, Delta said its net income declined 58 percent $198 million, or 23 cents a share, from $467 million, or 55 cents, a year earlier.

Airline Earnings

Delta is the second of the biggest U.S. carriers to trail analysts’ earnings estimates for the three months through June. AMR Corp. (AMR)’s American Airlines last week posted a $286 million loss, or 85 cents a share, which was wider than the 81-cent deficit estimated by analysts.

United Continental Holdings Inc. (UAL) and US Airways Group Inc. (LCC) posted profits last week that exceeded analysts’ estimates.

Delta fell 7 cents to $7.95 at 8:14 a.m. before the start of regular trading on the New York Stock Exchange. The shares fell 36 percent this year before today.

United Airlines parent UAL Corp. and Continental Airlines Inc. merged in October in all-stock deal, surpassing Delta as the world’s largest carrier.
To contact the reporter on this story: Mary Jane Credeur in Atlanta at [email protected].

To contact the editor responsible for this story: Ed Dufner at [email protected].
 
The 140 planes leaving have been announced before, mainly RJs, Saabs, and DC9s. . DL will also be adding MD90s in the near future, with more than 15 sitting in IND and GSO waiting for mods. Notice 2000 people took early outs, which hit the "net" profit. Instead of 198 million in net profits, it would have been 366 million. More than 160 pilots took the early out offer too, which was a pretty good deal for those who wanted to retire in the near term anyway. Of those, 130 were Captains.


OYS
 
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The 140 planes leaving have been announced before, mainly RJs, Saabs, and DC9s. . DL will also be adding MD90s in the near future, with more than 15 sitting in IND and GSO waiting for mods. Notice 2000 people took early outs, which hit the "net" profit. Instead of 198 million in net profits, it would have been 366 million. More than 160 pilots took the early out offer too, which was a pretty good deal for those who wanted to retire in the near term anyway. Of those, 130 were Captains.


OYS







Lets hope they dont pass out pink slips
 
Somehow people seem to be losing sight that the company posted a $200m profit for 1 quarter! The analysts were expecting more, the shareholders were expecting what the analysts expected, and so you see a 8-10% hit on the share price which is exactly how much DAL missed expectations by.

But remember, this is the airline industry folks. These aren't banks or oil companies. Anytime an airline can turn a profit is an exception to the rule, and kudos to DAL for turning $200m in 1 quarter.
 
Lets hope they dont pass out pink slips

DL was expecting 40-50 Captains to take the early out offer, and they got 130 along with 34 senior FOs, 12 of which were on the 744. That means they will be short, lots of training coming up, which could mean hiring.


OYS
 
What will come first, paycuts of furloughs?

At SWA? or RAH? Hey sweet-heart, how are you? I see Delta has gotten under your skin again..

CYA
 

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