Delta Expects 4th Quarter Operating Loss

[ChrisW]

Via Reuters:

The No. 3 U.S. carrier lowered its operating profit margin target to a range of 0 percent to negative 2 percent. That compares with an October forecast of an operating profit margin of 3 percent to 5 percent, Delta said in a filing with the U.S. Securities and Exchange Commission.

http://www.reuters.com/article/marke...rpc=44&sp=true

From the Atlanta Journal-Constitution article:

In updated guidance to investors, Bastian said Delta now expects its operating profit margins in the final three months of the year to be flat or down 2 percent as a result of high fuel prices. The carrier had earlier projected operating margins of 3 percent to 5 percent in the fourth quarter.

The revised estimate means Delta will likely report a loss in the fourth quarter.

This year, airlines had been rebounding after years of losses as Delta and other carriers emerged from bankruptcy reorganizations with much leaner operations.

But Bastian said Delta is once again taking cost-cutting measures such as freezing new hires in "non-public-facing" job categories and targeting some unspecified positions for cuts. It is also parking aircraft and reducing its marketing budget in the face of a steep rise in fuel costs, its largest expense.

Delta now expects its average fuel price in the final three months of the year to be $2.60 per gallon, about 13 percent higher than previous projections. Jet fuel is Delta's largest expense.

http://www.ajc.com/business/content/...elta_1204.html

We haven't parked any aircraft that are on our own books. However, we have decided to not renew leases on the aircraft the article mentions - a mix of RJs, MD-88s and domestic 767-300s (if anyone's interested, Ryan International took 767-332/N120DL). In general they over-estimated their 4th quarter revenues however overall it was a great year for the airline.

[Alex T]

Once Delta starts all of their intl routes of ATL, SLC, CVG and JFK, who would be the largest US Airline in terms of intl services from the United States?

I think AA is right now correct? It would seem Dl would serve the most intl destinations from the US once all of it is established?

Alex

[T-Bird76]

Its not just Delta that will be reporting losses again. The dramatic increase in the price of fuel has hurt most of the major airlines who didn't hedge fuel. Expect losses across the board.

[ChrisW]

Yeah Tommy, jet fuel has doubled in price this year! Just amazing, considering all the big oil tycoons are ROLLING in cash these days while this industry (and others) are bleeding as a result.

As for the job cuts (which I had a vested interest in upon reading these articles):

Mike Campbell, e.v.p.-Human Resources and Labor Relations, responded to early media reports predicting job cuts. “We are simply taking steps to reduce administrative costs through attrition and a hiring freeze in administrative functions,” Mike said. “We continue to hire for customer-facing positions.”