Delta lost $1.4 billion in 4th quarter, expects more of same

ATLANTA — Demand for air travel continues to weaken as deep fare sales in recent weeks have not spurred customers to open up their wallets in droves, Delta Air Lines Inc. executives said today after the world's biggest carrier posted a $1.4 billion loss for the final three months of 2008 and signaled that the revenue environment for 2009 will be challenging.


Delta shares were down 18 percent in active trading this afternoon.

The Atlanta-based carrier said advance bookings for February and March so far are not promising, especially for international flights.

Delta said it is prepared to cut capacity further than its current plans if needed. Fees for amenities that were once free will continue to be an important part of its revenue stream, although Chief Executive Richard Anderson said Delta is not considering adding a fee for carry-on bags.

Mr. Anderson said the global financial crisis has hit consumers hard and significantly cut into their discretionary spending.

"We're facing a very different world this year," he said.

Executives said the airline expects to post a sizable loss for the first quarter, which began Jan. 1, but is forecasting a profit for the full year. With the economy uncertain at best, a spike in fuel prices or a significant further drop in demand could change those projections.

Fare sales of late don't seem to be reeling in big numbers of customers, said Glen Hauenstein, Delta's executive vice president of network planning and revenue management. Demand has dropped in many regions, but especially in the Detroit and Cincinnati areas on the domestic side, which have been affected by cuts in the automotive and industrial sectors, and on trans-Atlantic routes on the international side, executives said. Delta's Atlanta, Minneapolis and Salt Lake City hubs also have been hit, but not as hard as other areas, executives said.

It's not just leisure travelers who are not spending as much, it is business travelers as well.

"They're flying in the front cabin less often," Delta President Ed Bastian said.

The airline operator also projected that 2009 consolidated passenger unit revenue would be down 4 percent. It reiterated its previously announced plans to cut systemwide capacity 6 percent to 8 percent this year.

Delta's net loss in the fourth quarter was equivalent to $2.11 a share for the October-December period, compared to a loss of $70 million, or 18 cents a share, for the same period a year earlier. The loss in the latest quarter included a $904 million charge related to employee equity awards.

Delta had said that when it completed its acquisition of Northwest Airlines it would issue a nearly 13.4 percent equity stake in the combined airline to employees.

Excluding special items, Delta said it lost $340 million, or 50 cents a share. Analysts surveyed by Thomson Reuters, who generally exclude one-time items from their estimates, expected a loss of 34 cents a share. Delta said the analysts' estimates did not factor in a 12 cents per share loss related to the non-cash impact of purchase accounting.

For all of 2008, Delta said it lost $8.9 billion, or $19.08 a share, compared to a profit of $1.6 billion in 2007. The company did not provide a per-share figure for the 2007 profit because it was in bankruptcy during the first four months of that year. Twelve-month revenue rose to $22.7 billion, compared to $19.2 billion for the prior year.

Delta Air Lines Inc. operates Delta, Northwest, Comair, Mesaba Airlines and Compass Airlines.



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