Delta Expects 'Significant Q1 Loss'

Delta Air Lines Inc. expects to record a “significant loss” for the first three months of 2009, the carrier said Monday in a Securities and Exchange Commission filing.
Atlanta-based Delta (NYSE: DAL) said the typically weak demand of the first quarter of the year and the sour economy will couple with upside-down fuel hedges and drops in global demand to send it to a “significant loss in the March 2009 quarter.”

“We believe a combination of lower fuel prices, capacity reductions, and merger synergies better positions us to effectively manage our business through the current economic crisis,” Delta said in its year-end filing with the SEC. “Nevertheless, we expect to report a significant loss in the March 2009 quarter primarily due to fuel hedge losses coupled with the impact of the global recession, which has weakened demand for air travel, and the first quarter traditionally being our weakest quarter due to seasonality.”

Demand for air travel has waned as wary consumers and businesses put off or cancel trips in the uncertain economy. Delta has said it would cut its capacity this year by 6 percent to 8 percent. Delta said Monday that if conditions worsen, the carrier could make additional reductions to capacity.

......It expects the single operating certificate from the Federal Aviation Administration by the end of the year.

........The recession and stock market collapse has bitten Delta’s retirement plans. The carrier said it also expects be hit with higher pension costs for 2009 because of the declining value of benefit plan assets.

The carrier will also suffer rising costs because of “timing delays between the reduction in capacity and our ability to remove certain capacity-related costs,” and a $260 million charge from increased amortization of debt caused by the “lower fair value of Northwest debt” since closure of the airlines’ merger.