Delta Air Lines reports net loss for first-quarter
Delta Air Lines, the world’s largest carrier, reported a $794 million first-quarter net loss on lower demand for travel because of the recession.
The net loss was 96 cents a share, Delta said in a statement. Excluding costs for severance payments and merger expense, the loss was 84 cents a share.
Delta added a $50 fee for overseas travelers who check a second bag, which it said will generate more than $100 million annually, and will ground all 14 Boeing Co. 747-200 freighters acquired in the purchase of Northwest Airlines because the 25- year-old jets are inefficient and cargo revenue has plunged.
“We remain focused on making disciplined decisions about capacity, costs and capital, achieving merger synergies and finding new sources of revenue,” Chief Executive Officer Richard Anderson said in the statement.
Revenue for the combined airline was $6.68 billion, a drop of 15 percent as if Delta and Northwest had been merged a year earlier instead of in October, when the all-stock deal closed. Cargo revenue fell 44 percent, while passenger revenue tumbled 18 percent as business and leisure fliers cut back on spending.
Delta has lost money for six straight quarters. The company reported $101 million in one-time costs, including $50 million for severance payments to workers who took buyouts and $49 million for merger-related expenses.
Delta’s deficit adds to quarterly losses that may total $2 billion for the nine biggest U.S. carriers after lower ticket prices and dwindling traffic erased benefits from lower fuel costs. AMR Corp.’s American Airlines last week reported a loss of $375 million, and Southwest Airlines Co. had a $91 million deficit.
Cash, cash equivalents and short-term investments totaled $4.5 billion at the end of March, Delta said. The airline said it also had $500 million in an undrawn line of credit.
That $5 billion in unrestricted liquidity was unchanged from Dec. 31, Delta said. The total will rise to more than $6 billion by the end of the year, Chief Financial Officer Hank Halter said in the statement.
Delta fell 51 cents, or 7 percent, to $6.81 yesterday in New York Stock Exchange composite trading. The shares declined 41 percent this year before today.
Source: Bloomberg
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