Posted on: Wednesday, October 20, 2004

Delta suffering huge losses

By Harry R. Weber
Associated Press

ATLANTA — Delta Air Lines Inc. is expected to report another huge quarterly loss today, and plans to skip its routine of speaking to investors — a sign to some observers that a bankruptcy filing is near. One analyst said in a research note that a Chapter 11 filing is highly likely soon.

Delta was mum yesterday on its intentions, except to repeat a prior statement that it will have to seek court protection if it fails to restructure its heavy debt and win deep concessions from its pilots in the next several weeks.

Company shares fell 12 cents, or 3.9 percent, to close at $2.99 yesterday on the New York Stock Exchange. The shares have fallen more than 90 percent since the 2001 terrorist attacks, but remain slightly above the 52-week low of $2.94 posted on Sept. 27.

In a Securities and Exchange Commission filing on Friday, Delta revealed that it expects its net loss for the third quarter to be $625 million to $675 million, or $4.99 to $5.39 a share. The loss, to be reported today before the market opens, would be significantly higher than the $3.79 a share analysts had expected.

In a statement accompanying the filing, Delta said it will not conduct a conference call with investors today to answer questions about the earnings release. It cited in part as a reason its efforts to avoid bankruptcy.

"It's highly unusual, but what are they going to say, because everyone is going to be wondering about the pilots," said Ray Neidl, an analyst with Calyon Securities Inc. in New York. "I see that as a sign that the end is near."

UBS analyst Robert Ashcroft said in a research note yesterday that the likelihood of a Chapter 11 filing by the nation's third-largest airline has increased since the SEC filing because of how little cash it has left to repay debt. Delta says it had $1.45 billion in unrestricted cash as of Sept. 30, below the $1.5 billion threshold many analysts believe is tantamount to a bankruptcy filing.

"It would take a brave person to approach a credit committee with a proposal to loan Delta more money right now," Ashcroft said. He added that bankruptcy is "not a foregone conclusion, but highly likely" within a month or two.

Atlanta-based Delta has $20.6 billion in total debt and has been trying to restructure some of its debt commitments to help avoid bankruptcy. Delta is seeking $1 billion in concessions from its pilots, who have publicly offered up to $705 million. Delta warned recently that even with the concessions it is seeking, it still may go into bankruptcy.