Oct. 20, 2004
By: Bill Liss
News 11 Atlanta
Delta Air Lines inched closer to bankruptcy Wednesday after posting a whopping third quarter loss.
For Wall Street and security analysts, the mood is to prepare for bankruptcy, but at Delta, it's a different story.
The carrier is bracing for a dramatic recovery to avoid the bankruptcy court. The big question is -- can they do it? After all, the nation's largest carrier, American, did just that and avoided Chapter 11.
Delta officials say that out of the $5 billion it needs to stay out of bankruptcy court, it will save almost $4 billion with internal cost cutting, another $1 billion if the pilots agree to wage and benefit concessions, and even more if investors agree to certain refinancing requests.
"Last month we outlined the key elements of Delta's transformation plan which targets $1 billion in annual pilot cost savings, as well as participation from Delta's other stakeholders," said Gerald Grinstein, Delta's chief executive officer. "As Delta's financial situation continues to deteriorate, time is of the essence."
As for Delta pilots, talks are now going on near Miami, where pilots are gathered for a yearly meeting. Experts say watch for a deal within days.
For now, it's not a rosy picture for the nation's third largest airline. The carrier is reporting a $646 million loss for the third quarter, despite revenues being up 5.9 percent or $3.87 million.
For the first nine months of the year, Delta is down $3.01 billion, again despite revenue gains of 8.4 percent or $11.36 billion. The big culprit -- skyrocketing fuel costs.
To avoid leaving it to the courts to decide which way Delta will go, the carrier continues to slice away at its operations. On the way, 7,000 more layoffs, in addition to 16,000 already made, along with 10-percent pay cuts and cuts in health and other benefits.
As efforts continue to keep the airline financially aloft, Delta stock took another nosedive Wednesday. The stock sits at $2.78 per share, which is a new low.
Also of note, for the first time in recent memory, Delta cancelled its quarterly call to analysts to discuss the quarterly results -- no reasons given.
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