Delta expects quarterly loss to exceed forecast twofold
•
Chart: Airline stock comparison
By Mark Niesse
Associated Press
ATLANTA — Delta Air Lines said its third-quarter losses will be nearly twice as much as previously expected, sending its stock tumbling along with others in the airline sector.
Delta expects to lose about $350 million in the third quarter because of sluggish revenue and demand, the carrier said yesterday. The loss is about $225 million after one-time items are excluded.
The announcement came a day after Delta told employees it was cutting another 1,500 flight attendant jobs, and a trade group warned the entire airline industry could lose a record $8 billion this year.
The severity of the losses prompted Delta to delay its stock market opening as requested by the Securities and Exchange Commission.
"In and of itself, Delta's announcement is largely immaterial. However, the halt of trading and the unfortunate bankruptcy speculation it created is weighing heavily on the stock," said Jamie Baker, an airline analyst with J.P. Morgan.
Delta shares sank 24.4 percent, or $2.81 a share, to $8.69 in trading on the New York Stock Exchange.
Other airline shares were also lower. American Airlines' parent AMR shares fell 12.6 percent, or 61 cents, to $4.25 a share; United Airlines' parent UAL shares were off 19.7 percent, or 58 cents a share, to $2.36 and Continental Airlines shares lost 7.6 percent, or 44 cents, to $5.36 a share, also on the NYSE.
"September turned out to be even weaker than people were thinking," said Raymond Neidl, an analyst for Blaylock & Partners LP. "The overall market is down today. The Delta announcement is one of the things that set that up."
The Air Transport Association said Thursday that major carriers are on course to lose $1.5 billion to $2 billion in the third quarter and $2.5 billion to $3.5 billion in the fourth quarter. Airlines lost $3.8 billion in the first half of the year.
In 2001, airlines had a combined net loss of $7.7 billion, although that included the effect of $5 billion in cash paid out by the federal government as part of a bailout approved by Congress after the terrorist attacks.
Despite a better-than-expected rebound in travel demand in the spring, traffic has continued to fall flat and average fares have continued to decline.
Delta joins other major airlines also making cuts this fall, including American, which recently said it will slash 7,000 jobs.
