Posted on Thu, Nov. 13, 2003
Delta revises earnings forecast
By Trebor Banstetter
Star-Telegram Staff Writer
An unexpected jump in pilot retirements will cost Delta Air Lines an additional $140 million this quarter, forcing the carrier to widen its anticipated loss for the fourth quarter.
Delta, which operates a small hub at Dallas/Fort Worth Airport and has about 5,000 employees here, expects to lose between $365 million and $415 million during October, November and December.
Previously, the airline had predicted a loss ranging from $225 million to $275 million for the quarter.
Several large airlines, including Fort Worth-based American Airlines, have experienced a high number of retirements among pilots this year because of bankruptcy fears, according to pilot unions.
Pilots, who traditionally enjoy lucrative retirement benefits, worry that a future bankruptcy filing could wipe out some of those pension funds.
Delta said 620 pilots retired this year, about twice as many as usual, which put pressure on the pension fund because pilots take a portion of their benefits as a lump sum. The airline estimates that it will have to pay between $350 million and $450 million into its pension plans next year.
But the news didn't seem to bother investors. Delta's stock closed at $12.56 per share, up 14 cents, after the announcement.
Airline analyst Sam Buttrick of UBS Securities said Wall Street wasn't concerned about the pension payout, because it doesn't affect the airline's operations.
"From our perspective, it changes nothing," he said.
Since 1991, Delta has lost $2.9 billion. The airline has launched a cost-cutting campaign in an attempt to return to profitability but has been unable to persuade pilots to agree to concessions that would lower labor expenses.
Delta's pilots, who are the highest-paid among the major U.S. carriers, are the airline's only unionized labor group.
Jamie Baker, an airline analyst with J.P. Morgan, said he doesn't expect a new pilot contract anytime soon.
"We do not believe a pilot deal is achievable during this quarter or next," he wrote in a recent report to investors, "for the simple reason that things are getting better out there and the balance sheet at Delta is still too strong."
Delta revises earnings forecast
By Trebor Banstetter
Star-Telegram Staff Writer
An unexpected jump in pilot retirements will cost Delta Air Lines an additional $140 million this quarter, forcing the carrier to widen its anticipated loss for the fourth quarter.
Delta, which operates a small hub at Dallas/Fort Worth Airport and has about 5,000 employees here, expects to lose between $365 million and $415 million during October, November and December.
Previously, the airline had predicted a loss ranging from $225 million to $275 million for the quarter.
Several large airlines, including Fort Worth-based American Airlines, have experienced a high number of retirements among pilots this year because of bankruptcy fears, according to pilot unions.
Pilots, who traditionally enjoy lucrative retirement benefits, worry that a future bankruptcy filing could wipe out some of those pension funds.
Delta said 620 pilots retired this year, about twice as many as usual, which put pressure on the pension fund because pilots take a portion of their benefits as a lump sum. The airline estimates that it will have to pay between $350 million and $450 million into its pension plans next year.
But the news didn't seem to bother investors. Delta's stock closed at $12.56 per share, up 14 cents, after the announcement.
Airline analyst Sam Buttrick of UBS Securities said Wall Street wasn't concerned about the pension payout, because it doesn't affect the airline's operations.
"From our perspective, it changes nothing," he said.
Since 1991, Delta has lost $2.9 billion. The airline has launched a cost-cutting campaign in an attempt to return to profitability but has been unable to persuade pilots to agree to concessions that would lower labor expenses.
Delta's pilots, who are the highest-paid among the major U.S. carriers, are the airline's only unionized labor group.
Jamie Baker, an airline analyst with J.P. Morgan, said he doesn't expect a new pilot contract anytime soon.
"We do not believe a pilot deal is achievable during this quarter or next," he wrote in a recent report to investors, "for the simple reason that things are getting better out there and the balance sheet at Delta is still too strong."
