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Delta\'s quarterly report
ATLANTA (AP) -- Delta Air Lines Inc., which has warned of the possibility of bankruptcy if it doesn't get deep concessions from pilots, reported a second quarter loss of nearly $2 billion because of hefty charges.
The results, announced Monday, were worse than Wall Street's reduced expectations and came despite a 13 percent rise in revenue.
The news was tempered, however, by a rumor that Delta was close to an agreement with its pilots, said industry analyst Ray Neidl of Blaylock and Partners in New York. Delta's shares rose more than 7 percent.
"I don't believe it," Neidl said of the rumor. "But that's what is driving the stock,"
Asked about the rumor, Delta spokeswoman Meghan Glynn said, "I put that in the category of rumor and speculation and we don't comment on that."
Pilots union spokeswoman Karen Miller said the rumor "is absolutely not true." She said the union is working on a comprehensive proposal it will present to management in the "very near future."
The stock boost also came as Delta announced that it ended the quarter with $2 billion in unrestricted cash on hand and it has arranged third-party financing resulting in $150 million of incremental liquidity.
"It's positive, but it's no surprise," Neidl said.
The nation's third-largest airline said its net loss for the three months ending June 30 was $1.97 billion, or $15.79 a share, compared to a profit of $180 million, or $1.40 a share, in the same three-month period a year ago.
The loss includes $1.65 billion in previously announced non-cash charges and $5 million in dividends paid out to preferred shareholders.
Excluding the charges, Delta said it lost $312 million, or $2.55 a share, in the April-June quarter. Analysts surveyed by Thomson First Call were expecting a loss of $2.46 a share.
Revenue in the second quarter rose 13.3 percent to $3.96 billion, compared to $3.50 billion a year ago.
"As expected, today's results further confirm the urgent need for Delta to transform itself, once again," chief executive Gerald Grinstein said. "The challenges we face are significant and all of our stakeholders must participate in the solution if we are to be successful."
Last week, Delta warned it would be taking the hefty charges and said it will no longer recognize income tax benefits, which will boost its future net losses. Analysts reduced their loss estimates for Delta following the announcement.
The charges were taken in part because Delta's actual and projected financial performance for 2004 has been significantly hurt by higher than expected fuel costs and lower returns from its U.S. business.
As a result, the company has said it is unclear when Delta will be able to generate sufficient taxable income to use its deferred income tax assets, which involve certain expenses that Delta can use for income tax deductions.
Some of the charges are also due to an increase in pilot retirements. About 300 pilots retired in June. Most were early retirements.
Delta recorded a $1.53 billion non-cash charge related to deferred income taxes. It also recorded a $117 million non-cash settlement charge related to the company's defined benefit pension plan for pilots as a result of higher than average pilot retirements.
For the first six months of the year, Atlanta-based Delta said it lost $2.36 billion, or $18.95 a share, compared to a loss of $290 million, or $2.35 a share, in the year-ago period. The current loss includes $9 million paid out in dividends to preferred shareholders.
Six-month revenue was $7.49 billion, a 9.8 percent increase from the $6.82 billion recorded a year ago.
Shares of Delta were up 39 cents, or 7 percent, at $5.89 in afternoon trading on the New York Stock Exchange.
Delta has lost more than $5 billion and laid off 16,000 employees in the last three years. It is seeking deep wage cuts from pilots as part of its recovery.
Without the concessions, Delta has warned it may have to file for bankruptcy.
ATLANTA (AP) -- Delta Air Lines Inc., which has warned of the possibility of bankruptcy if it doesn't get deep concessions from pilots, reported a second quarter loss of nearly $2 billion because of hefty charges.
The results, announced Monday, were worse than Wall Street's reduced expectations and came despite a 13 percent rise in revenue.
The news was tempered, however, by a rumor that Delta was close to an agreement with its pilots, said industry analyst Ray Neidl of Blaylock and Partners in New York. Delta's shares rose more than 7 percent.
"I don't believe it," Neidl said of the rumor. "But that's what is driving the stock,"
Asked about the rumor, Delta spokeswoman Meghan Glynn said, "I put that in the category of rumor and speculation and we don't comment on that."
Pilots union spokeswoman Karen Miller said the rumor "is absolutely not true." She said the union is working on a comprehensive proposal it will present to management in the "very near future."
The stock boost also came as Delta announced that it ended the quarter with $2 billion in unrestricted cash on hand and it has arranged third-party financing resulting in $150 million of incremental liquidity.
"It's positive, but it's no surprise," Neidl said.
The nation's third-largest airline said its net loss for the three months ending June 30 was $1.97 billion, or $15.79 a share, compared to a profit of $180 million, or $1.40 a share, in the same three-month period a year ago.
The loss includes $1.65 billion in previously announced non-cash charges and $5 million in dividends paid out to preferred shareholders.
Excluding the charges, Delta said it lost $312 million, or $2.55 a share, in the April-June quarter. Analysts surveyed by Thomson First Call were expecting a loss of $2.46 a share.
Revenue in the second quarter rose 13.3 percent to $3.96 billion, compared to $3.50 billion a year ago.
"As expected, today's results further confirm the urgent need for Delta to transform itself, once again," chief executive Gerald Grinstein said. "The challenges we face are significant and all of our stakeholders must participate in the solution if we are to be successful."
Last week, Delta warned it would be taking the hefty charges and said it will no longer recognize income tax benefits, which will boost its future net losses. Analysts reduced their loss estimates for Delta following the announcement.
The charges were taken in part because Delta's actual and projected financial performance for 2004 has been significantly hurt by higher than expected fuel costs and lower returns from its U.S. business.
As a result, the company has said it is unclear when Delta will be able to generate sufficient taxable income to use its deferred income tax assets, which involve certain expenses that Delta can use for income tax deductions.
Some of the charges are also due to an increase in pilot retirements. About 300 pilots retired in June. Most were early retirements.
Delta recorded a $1.53 billion non-cash charge related to deferred income taxes. It also recorded a $117 million non-cash settlement charge related to the company's defined benefit pension plan for pilots as a result of higher than average pilot retirements.
For the first six months of the year, Atlanta-based Delta said it lost $2.36 billion, or $18.95 a share, compared to a loss of $290 million, or $2.35 a share, in the year-ago period. The current loss includes $9 million paid out in dividends to preferred shareholders.
Six-month revenue was $7.49 billion, a 9.8 percent increase from the $6.82 billion recorded a year ago.
Shares of Delta were up 39 cents, or 7 percent, at $5.89 in afternoon trading on the New York Stock Exchange.
Delta has lost more than $5 billion and laid off 16,000 employees in the last three years. It is seeking deep wage cuts from pilots as part of its recovery.
Without the concessions, Delta has warned it may have to file for bankruptcy.
