I know we announced 6-8 percent capcity cut but this is the first time I have seen 50 MAINLINE jets leaving. Is that even more airplanes than before? I assume that is both at Delta and NWA, correct??
"Delta said today it will remove 40 to 50 of its mainline jets from the fleet in 2009 as it trims seating capacity by 6 percent to 8 percent. The company said it will “monitor the demand environment” and can cut more deeply if warranted. "
Delta Air Tumbles Most in 4 Months After Loss Exceeds Estimates
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By Mary Jane Credeur
Jan. 27 (Bloomberg) -- Delta Air Lines Inc., the world’s largest carrier, fell the most in four months in New York trading after posting a fourth-quarter loss that exceeded analysts’ estimates.
Excluding one-time costs for fuel hedges and stock grants related to buying Northwest Airlines, the loss was $340 million, or 50 cents a share, Delta said today in a statement. Revenue was $6.71 billion, which also trailed some projections.
Delta’s contracts to purchase jet fuel in advance became a drag on results after market prices plunged 63 percent in 2008’s second half, leaving the airline locked in at higher rates. For 2009, Delta plans to cut available seats by as much as 8 percent to weather a drop in travel from the recession.
“They were light on revenue, fuel hedges ate into things and they’re seeing pressure on traffic like everybody else,” said Helane Becker, an analyst at Jesup & Lamont in New York who recommends buying the shares. She estimated sales at $7 billion.
Delta’s net loss was $1.44 billion, or $2.11 a share. That compared with a year-earlier loss of $70 million, or 18 cents, when Atlanta-based Delta was a standalone company.
Ray Neidl, a Calyon Securities analyst in New York, said the deficit was 38 cents a share after subtracting costs for purchase accounting related to the Northwest merger, wider than his 25-cent estimate. The average loss estimate of 12 analysts surveyed by Bloomberg was 32 cents a share, without the one-time expenses.
Shares Tumble
Delta plunged $2.14, or 22 percent, to $7.79 at 10:11 a.m. in New York Stock Exchange composite trading. The shares touched $7.50 earlier for their biggest intraday decline since Sept. 8.
The one-time expenses included $969 million in stock grants for employees and merger-related costs; $91 million for adjusting the value of fuel hedges; and $38 million in other costs, Delta said.
Delta’s combined fuel bill for the quarter was $2.29 billion. That included $507 million in fuel-hedge contract losses that settled in the fourth quarter, the carrier said. Delta had to post $1.1 billion in collateral on outstanding hedges.
Cash and short-term investments totaled $4.47 billion at the end of the quarter, excluding $453 million in restricted funds, Delta said.
Combined traffic for Delta and Northwest, measured by miles flown by paying passengers, slid 2.7 percent from a year earlier while the number of available seats declined 3.8 percent as the airlines parked some jets and trimmed flights.
Cutting Flights
Delta said today it will remove 40 to 50 of its mainline jets from the fleet in 2009 as it trims seating capacity by 6 percent to 8 percent. The company said it will “monitor the demand environment” and can cut more deeply if warranted.
Because of the pullback, Delta plans to eliminate another 2,000 jobs through voluntary buyouts, Chief Executive Officer Richard Anderson said in an interview in Tokyo on Jan. 15.
Delta today forecast an operating margin of 6 percent to 8 percent for all of 2009. Passenger unit revenue will drop by about 4 percent.
“Despite the difficult economic environment, we expect to be solidly profitable in 2009, driven by lower fuel costs, capacity discipline and merger synergies,” Anderson said in the statement.
Delta surpassed AMR Corp.’s American Airlines as the world’s largest carrier by traffic with its acquisition of Northwest Airlines Corp. in an all-stock deal in October. The combined company kept Delta’s name.
To contact the reporter on this story: Mary Jane Credeur in Atlanta at
[email protected].
Last Updated: January 27, 2009 10:19 EST