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The Honolulu Advertiser

Posted on: Friday, April 22, 2005

Delta 1st-quarter loss at $1.08B

By Harry R. Weber
Associated Press

ATLANTA — Delta Air Lines Inc., the nation's third-largest carrier, blamed record high fuel prices and a hefty charge partly related to job cuts as it reported its first-quarter loss nearly tripled to more than $1 billion despite a more than 3 percent rise in revenue.

The results, announced before the market opened yesterday, missed Wall Street expectations, but Delta shares rose 12 cents, or 3.3 percent, to $3.77 in late morning trading on the New York Stock Exchange as the airline said its transformation plan is on target.

The Atlanta-based company said that for the three months ending March 31 it lost $1.08 billion, or $7.64 a share, compared to a loss of $387 million, or $3.12 a share, for the same period a year ago. The current loss includes $5 million in dividends paid out to preferred shareholders.

Delta's loss dwarfed those reported over the past two days by other major carriers for the quarter. On Wednesday, Fort Worth, Texas-based AMR Corp., parent of American Airlines, posted a $162 million loss, and Houston-based Continental Airlines Inc. said it lost $184 million in the quarter. Northwest Airlines Corp. of Eagan, Minn., posted a $458 million quarterly loss yesterday.

Excluding one-time items, Delta said it lost $684 million, or $4.89 a share. Analysts surveyed by Thomson Financial were expecting a loss of $4.76 a share excluding one-time items.

Revenue rose 3.3 percent to $3.65 billion, compared to $3.53 billion recorded a year ago.

"Today's financial results clearly are disappointing," said Gerald Grinstein, Delta's chief executive officer. "Record-breaking fuel prices are masking the many crucial, large-scale, core initiatives our airline implemented during the quarter."

He added, "The issue is simple: including fuel, Delta is not on plan, but excluding fuel, we are better than plan."

Chief financial officer Michael Palumbo told investors in a conference call that even though fuel prices weighed heavily on Delta's results, the airline was able to cut costs in other areas as part of its transformation plan. At the same time, he said the company's total debt remains at $20.5 billion, noting that "We clearly have more work to do."