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Delta, Northwest report combined $10.5B loss on fuel costs

Delta Air Lines Inc., the nation's third-largest carrier, said Wednesday its loss widened in the first quarter to a whopping $6.39 billion because of soaring fuel prices and the steep decline in the company's market value.

Northwest Airlines, which will be acquired by Delta to create the world's largest airline, reported a $4.1 billion loss in the first quarter.

Delta's results badly missed Wall Street expectations, despite a 12 percent increase in sales.

The Atlanta-based company said the loss is equivalent to $16.15 a share. That compares with a loss of $130 million that Delta reported in the January-March quarter a year
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ago, when it was still in bankruptcy.

Excluding special items, primarily a $6.1 billion non-cash charge relating to the decline in Delta's market value due to sustained record fuel prices, the airline lost $274 million, or 69 cents a share, in the first quarter.

In a memo to employees Wednesday, Ed Bastian, Delta's president and chief financial officer, said the airline expects some of its peers in the industry to record similar adjustments. A spokeswoman said Delta would have recorded the charge regardless of the tie-up with Northwest.

Analysts were expecting a Delta loss of 49 cents a share, excluding one-time items.

Revenue in the quarter rose to $4.77 billion, from $4.24 billion in the same period a year ago. Delta shares rose 9 cents, or 1.3 percent, to $6.89 in morning trading.

The company said its first-quarter loss before special items was driven by a $585 million year-over-year increase in the cost of fuel.

When it exited Chapter 11 protection, Delta projected its stock would be worth $9.4 billion to $12 billion in all, but that was assuming the price of crude would be at $70 per barrel.

Gas and oil prices pushed further into record high territory Tuesday, with crude nearing $120 a barrel. Retail gas reached a national average of $3.51 a gallon for the first time. Delta's current market value is roughly $2.7 billion, based on 395.6 million shares outstanding, which include shares not yet distributed to some creditors from its bankruptcy.

Delta announced last week that it would acquire Northwest Airlines Corp. in a stock-swap deal, which still must be approved by regulators and shareholders.

"Our need to respond to the pressures of dramatically rising fuel costs and a softening U.S. economy drove us to take a closer look at all options to protect Delta's future," Chief Executive Richard Anderson said in a statement. "The merger with Northwest will create an airline with the size, scale and global presence to weather economic downturns and compete long-term in the global marketplace."

we'll be bitching about plane ticket prices going up soon.... they'll just pass that expense on to us

shit balls..

The funny thing is that once these two combine, in about a five years, the future DELTA will be way smaller then either one of these companies on thier own.

They have no reason to merge, but to make a buck right now, in the next six months, and it won't be that much.

It just seems like nobody wants to be the first airline to bring up their prices to compensate for sky-high fuel costs because then they'd lose their passengers in droves... so instead they're fighting a war of attrition to see who's left standing in the end. Sounds like a silly strategy for everyone involved.

Either way it sucks for us in the long run.