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Pension expenses greatly widen Delta's net loss

February 15, 2007|From Bloomberg News

Delta Air Lines Inc., preparing to exit bankruptcy protection April 30, said its fourth-quarter net loss widened to $2 billion on costs to end its pilots' pension plan.

The loss a year earlier was $1.2 billion, the Atlanta-based carrier said. Without the pension expense and other charges, it lost $179 million, compared with $782 million a year earlier.

Delta, the third-largest U.S. airline, is working to leave court protection after rebuffing US Airways Group Inc.'s hostile takeover bid. It has cut costs by more than $3 billion a year and added higher-margin overseas routes and last year it posted its first profit before taxes and charges since 2000.

Delta said it recorded a $2.5-billion charge for reorganization items last quarter, including a $2.2-billion claim for the Pension Benefit Guaranty Corp. tied to terminating its pilots' pensions. The pension insurer took over the pilots' retirement plans in exchange for a claim in Delta's bankruptcy case.

Other charges included $801 million for a claim for retired pilots related to certain pension benefits and $539 million for a claim by pilots and other retirees regarding health benefits.

Sales increased 5.3% to $4.1 billion. Delta joined other major carriers in 10 industrywide fare increases in 2006.

For the full year, Delta's net loss widened to $6.2 billion from $3.8 billion in 2005. Sales increased 6.1% to $17.1 billion from $16.2 billion. Excluding $6.2 billion in restructuring charges as well as taxes, interest and other items, Delta said its 2006 profit was $58 million.

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