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Delta Posts $168-Million Loss, Plans to Sell Planes

The airline also is asking pilots to agree to a 22% wage cut even as talks with union have stalled.

October 15, 2003|From Associated Press

ATLANTA — Delta Air Lines Inc. is selling planes and urging pilots to agree to wage cuts amid signs its financial situation will continue to sputter in the months ahead.

The No. 3 U.S. airline said Tuesday that it was selling 11 planes and delaying the delivery of eight more as it lost $168 million, or $1.36 a share, in the third quarter, compared with a loss of $330 million, or $2.67, for the same period a year earlier. The loss includes $4 million paid out in dividends to preferred shareholders.

Shares of Atlanta-based Delta fell 96 cents to $13.74 on the New York Stock Exchange.

Excluding one-time items, Delta said it lost $172 million, or $1.43 a share, for the three months ended Sept. 30. Analysts surveyed by Thomson First Call expected a loss of $1.46 a share excluding one-time items.

Revenue was flat at $3.44 billion compared with $3.42 billion a year earlier.

Delta executives again asked pilots to tighten their belts and agree to wage cuts. They warned that the company expects to lose as much as $275 million in the fourth quarter.

"No blame can be placed on Delta's pilots in how this contract happened," Chief Executive Leo Mullin said during a conference call. "However, the aviation industry has been significantly and permanently altered since then."

He said Delta's pilot costs are 80% higher than No. 1 carrier American Airlines, which won deep wage concessions from workers this year. Delta wants a 22% wage cut from its pilots and to rescind a 4.5% pay raise given in May and one due next year.

Talks between the company and its pilots union, however, have stalled. Mullin said Delta management would meet with newly elected union leaders Friday to go over the airline's financial situation, but it is not a negotiation session and no new sessions have been scheduled.

"Our position on negotiations has not changed," said pilots union spokeswoman Karen Miller.

Delta said it has reached an agreement with an unidentified third party to sell 11 Boeing 737-800 aircraft that had been scheduled for delivery to the airline in 2005. The transaction is expected to reduce the company's capital expenditures by $500 million.

Ray Neidl, an analyst with Blaylock & Partners in New York, said the plane sale is a wise move for Delta, as it and other major carriers lose market share to discount airlines.

Chief Financial Officer Michele Burns said the airline expects to lose $225 million to $275 million in the fourth quarter. Analysts are expecting the airline to lose about $200 million in the fourth quarter.

Last week, Delta told its 14,000 flight attendants it was imposing new rules that blend their base and overtime pay.

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