General Lee
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Delta Airlines Focused On Service, New Routes, CFO Says
DOW JONES NEWSWIRES
June 13, 2007 7:49 p.m.
By Paula L. Stepankowsky
Of DOW JONES NEWSWIRES
After a 19-month bankruptcy restructuring that fixed the balance sheet and reduced costs, Delta Air Lines Inc. (DAL) is focused on giving premium service and designing its route structures for maximum profit, Chief Financial Officer Ed Bastian said at a global transportation conference in New York Wednesday.
Delta's reputation for service suffered as it struggled with financial problems, but now it is focused on the customer - something that will pay off in increased revenue, Bastian said in a presentation broadcast over the Internet.
He said Delta's on-time rankings have improved to the point where it has been in first place 25 out of the past 26 weeks. It is also deep-cleaning its aircraft more often, as well as improving its baggage handling.
"This is a great opportunity for us to continue to reduce costs," Bastian said. "We will spend more than $100 million a year on lost baggage."
On the route front, Delta has ordered new Boeing 777 aircraft for use on new Asian flights, including, it hopes, to China, Bastian said. Delta is also working to increase flights to Europe, Africa and the Middle East, he said.
Earlier Wednesday, the Atlanta-based carrier said it would change its accounting for its SkyMiles frequent-flier program. This would add $72 million to revenue for the two-month period ending June 30 and $186 million for the eight-month period ending with December. For the latter period, Delta forecasts $43 million in pretax income, a turnaround from its previous estimate of a loss of $145 million.
Delta estimated a second-quarter operating margin of 11% to 12%, as domestic capacity is expected to fall by 4% to 6% and international capacity is expected to rise by 14% to 16%, compared with the same period in 2006. Mainline nonfuel unit costs are forecast to drop 2% to 3% in the quarter from the previous year.
Delta also amended its Visa/Mastercard card agreement to eliminate a $1.1 billion withholding requirement for Delta tickets purchased on Visa or MasterCard. While the airline was going through bankruptcy proceedings, the credit-card processors withheld paying Delta for an amount generally equal to potential liability for tickets purchased with Visa or MasterCard that hadn't yet been used for travel. Bastian said this savings will help reduce Delta's estimated $7.6 billion debt by the end of 2007.
Bye Bye--General Lee
DOW JONES NEWSWIRES
June 13, 2007 7:49 p.m.
By Paula L. Stepankowsky
Of DOW JONES NEWSWIRES
After a 19-month bankruptcy restructuring that fixed the balance sheet and reduced costs, Delta Air Lines Inc. (DAL) is focused on giving premium service and designing its route structures for maximum profit, Chief Financial Officer Ed Bastian said at a global transportation conference in New York Wednesday.
Delta's reputation for service suffered as it struggled with financial problems, but now it is focused on the customer - something that will pay off in increased revenue, Bastian said in a presentation broadcast over the Internet.
He said Delta's on-time rankings have improved to the point where it has been in first place 25 out of the past 26 weeks. It is also deep-cleaning its aircraft more often, as well as improving its baggage handling.
"This is a great opportunity for us to continue to reduce costs," Bastian said. "We will spend more than $100 million a year on lost baggage."
On the route front, Delta has ordered new Boeing 777 aircraft for use on new Asian flights, including, it hopes, to China, Bastian said. Delta is also working to increase flights to Europe, Africa and the Middle East, he said.
Earlier Wednesday, the Atlanta-based carrier said it would change its accounting for its SkyMiles frequent-flier program. This would add $72 million to revenue for the two-month period ending June 30 and $186 million for the eight-month period ending with December. For the latter period, Delta forecasts $43 million in pretax income, a turnaround from its previous estimate of a loss of $145 million.
Delta estimated a second-quarter operating margin of 11% to 12%, as domestic capacity is expected to fall by 4% to 6% and international capacity is expected to rise by 14% to 16%, compared with the same period in 2006. Mainline nonfuel unit costs are forecast to drop 2% to 3% in the quarter from the previous year.
Delta also amended its Visa/Mastercard card agreement to eliminate a $1.1 billion withholding requirement for Delta tickets purchased on Visa or MasterCard. While the airline was going through bankruptcy proceedings, the credit-card processors withheld paying Delta for an amount generally equal to potential liability for tickets purchased with Visa or MasterCard that hadn't yet been used for travel. Bastian said this savings will help reduce Delta's estimated $7.6 billion debt by the end of 2007.
Bye Bye--General Lee
