Delta Narrows Loss, Helped By 11% Increase In Sales
Bankrupt Delta Air Lines , which expects to exit Chapter 11 within days, posted a narrower first-quarter loss on higher fares and lower costs.
The No. 3 U.S. airline, which aims to emerge from bankruptcy by the end of this month and list new shares in early May, reported a loss of $130 million compared with a loss of $2.1 billion in the year-ago quarter. Results in both periods were burdened by restructuring expenses.
Excluding costs related to the carrier's reorganization and other special items, Delta said it lost $6 million, compared with a loss of $356 million in the first quarter of 2006.
Operating revenues rose 8.7% to $2.8 billion, boosted by higher fares and increased capacity.
Delta is exiting bankruptcy amid signs of softening demand for domestic U.S. air travel. A slowdown in air travel could threaten the long-suffering industry's nascent recovery.
Last week, Continental Airlines warned that it expects yields -- a measure of average ticket prices -- to decline this quarter, while Southwest Airlines said it expected second-quarter unit revenue to be down from the previous year.
But Delta is optimistic it can continue its improvement once it exits Chapter 11.
"We are well positioned to build on the momentum of our restructuring," said Delta Chief Financial Officer Edward Bastian in a statement.
Since filing for bankruptcy in September 2005, Delta has lowered labor costs, slashed debt, and expanded its international network.
Delta said it lowered operating costs by 2.3%, or $94 million, despite increasing capacity by 2.0%. Non-operating costs were reduced by 20.3%, or $41 million, as lower debt levels led to lower interest expenses.
Delta ended the quarter, which was plagued with severe weather, with $4 billion in cash, cash equivalents and short-term investments. Of that amount, $2.9 billion was unrestricted.
The carrier said it generated $461 million in free cash flow in the quarter.
The carrier, which was driven into Chapter 11 by high costs and low-fare competition, hopes to get court approval to leave bankruptcy at a hearing on Wednesday.
Once it emerges from bankruptcy, which could be set for April 30, Delta plans to cancel its current shares and issue new shares to its creditors. The new shares will be listed on the New York Stock Exchange.