Author Topic: Delta in Deep (Read 1580 times)

rpm · « **on:** January 21, 2005, 03:16:04 AM »

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NEW YORK (Reuters) - Delta Air Lines Inc. on Thursday posted a sharply wider fourth-quarter loss as it struggled with high fuel prices and low fares, and analysts warned of an even bigger loss in the first quarter of 2005, sending its shares down over 10 percent.

The No. 3 U.S. airline, which has narrowly avoided bankruptcy in the past few months, posted a net loss of $2.2 billion, or $16.58 a share, compared with a loss of $327 million, or $2.69 a share, a year earlier.

"Their numbers were worse than what we were expecting, and we weren't expecting much," Calyon Securities analyst Ray Neidl said in an interview. "We expect high fuel costs and low fares to continue into the first quarter, which will exaggerate Delta's losses further."

Delta, teetering on bankruptcy until it negotiated a concession package with its pilots in December -- which would save it $1 billion annually for five years -- in January slashed its fares by as much as 50 percent on domestic routes.

"Down the road, it may turn out to be a positive thing because of increased traffic stimulation in business travel, but you can safely look forward to very bleak first and second quarters," Neidl said.

The airline said it ended the fourth quarter with $2.1 billion in cash, of which $1.8 billion was unrestricted.

"Bankruptcy is not imminent anymore, with that amount of cash in hand," Neidl said. "But if fuel prices continue to rise, and fares stay as low as they are, bankruptcy remains a possibility for Delta."

How the #%!@ do you lose $2B in a quarter and stay in business? That's freakin' insane! I feel sorry for the poor schmucks that work there.

Charon · « **Reply #1 on:** January 21, 2005, 09:18:35 AM »

I haven't looked into it so please help me out here. Is it just US arilines that can't make any money, or is it a global issue for the industry? If it's only US airlines what did they do to **** things up so badly and so broadly?

Charon

GRUNHERZ · « **Reply #2 on:** January 21, 2005, 09:30:05 AM »

Good question Charon. My understanding is, at least as far as US airlines go, that it's the bigger traditional ones that suffer while smaller companies like JetBlue and Southwest do a lot better.

Dago · « **Reply #3 on:** January 21, 2005, 10:34:54 AM »

It is a global problem for the whole industry. Many of the smaller countries with a single major airline are only surviving because as the countries flagship carrier, their government pours money into them, often more as a matter of pride and providing employment, rather than an attempt to bridge them to profitablity. Even airlines in larger countries are suffering, many in a big way.

dago

Furball · « **Reply #4 on:** January 21, 2005, 10:50:00 AM »

its all airbus' fault!!

john9001 · « **Reply #5 on:** January 21, 2005, 11:57:51 AM »

JetBlue and Southwest are not doing good because they are small, they make money because of their business plan, and they are getting bigger.

the big old airlines were formed when the airlines were regulated and they were assured a profit, after deregluation they were stuck with high operating cost, wages, ect and low competive air fares. if they do not change they will fail and be replaced by more "jetblues".

also the big carriers thought the "hub and spoke" would be the answer but wile it works for cargo(UPS-fedex) it does not work for passengers, too many take off and landings and ground crew to handle bages and service planes. JB and SW use point to point routes.

BTW jetblue's CEO said he modeled jetblue.s biz plan after southwest's plan.

Dago · « **Reply #6 on:** January 21, 2005, 12:44:08 PM »

You can find fault with the hub and spoke if you like, but you better also acknowledge there are tremendous advantages to it. If you lived somewhere like Madison WI, you could jump on a major carrier, connect in Chicago or Minneapolis to anywhere in the world. If Southwest picked you up in Madison, where do you think they would take you with their point to point system? Maybe one or two places only. Point to point only works on a limited basis between major cities. P to P drastically reduces a persons ability to travel to many places. With P to P, when you do have to connect, without the hub/bank systems, you will experience long long layovers with frequent overnight stays during those layovers.

dago

beet1e · « **Reply #7 on:** January 22, 2005, 08:27:33 AM »

This news about Delta comes as no surprise, having read posts by Mr. Toad on this subject. The one he wrote that stuck out in my mind was about the building of a large and expensive terminal building at one of the major airports (can't recall which one it was) served by Delta.

Dago - are we going to try to be nice to each other in 2005? OK then, I have a question about your post.

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Originally posted by Dago
It is a global problem for the whole industry. Many of the smaller countries with a single major airline are only surviving because as the countries flagship carrier, their government pours money into them, often more as a matter of pride and providing employment, rather than an attempt to bridge them to profitablity.

Can I just ask you which countries you were referring to, and in what time frame? Iberia of Spain and TAP of Portugal are state run. As far as I know, NO British airline is state run or receives any government subsidy.

Furball! I was just about to say...

... in view of the financial difficulties being experienced by American long haul operators, help is at hand in the form of the new Airbus 380, which is about 15% cheaper to operate per seat-mile, and might prove to be the spade with which they can dig themselves out of the hole that they're in.

I see that UPS and FedEx already have orders for the A380. No doubt other American carriers will follow suit shortly.

Dago · « **Reply #8 on:** January 22, 2005, 09:58:16 AM »

Beetle, I will be happy to stay civil, as long as your refrain from posting negative threads about the USA, it's citizens or policies, even those thinly veiled with your supposed humor.

As far as the list of airlines, it's too long, but if you were curious, it wouldnt take you long to do the research. During my career, I have traveled to and met with the leaders of many airlines in differant countries. As part of "due diligence", I had to build a background report on the airline I was "auditing". This gave me a pretty fair picture of their financial situation. (used many sources, including D&B). Too often employees asked with an almost sad hope that we were there to consider buying them, as they often feared for their long term future due to continuing annual loses, even at times prior to 9/11 when profitability was not uncommon among airlines.

Most of those in the worst shape were if not the sole airline of a country, they were the only "major" or "international" airline. They existed only due to their nations subsidies reflecting the nations pride and determination to have a quality international airline to be proud of. None I mention were UK based, I never got around to working on any of those.

dago

beet1e · « **Reply #9 on:** January 22, 2005, 11:40:33 AM »

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Originally posted by Dago
Beetle, I will be happy to stay civil, as long as your refrain from posting negative threads about the USA, it's citizens or policies, even those thinly veiled with your supposed humor.

OK, but it's a two way street, so no jokes about our nation's dental health etc.

lada · « **Reply #10 on:** January 22, 2005, 11:57:48 AM »

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Originally posted by Dago
It is a global problem for the whole industry. Many of the smaller countries with a single major airline are only surviving because as the countries flagship carrier, their government pours money into them, often more as a matter of pride and providing employment, rather than an attempt to bridge them to profitablity. Even airlines in larger countries are suffering, many in a big way.

dago

well we are small country, with the only CSA, rest of airliners are from all around world. CSA belongs to goverment, thats true, but their profit is going up year by year.

So its not quite nessesry to pump money into it as you mentioned.

Dago · « **Reply #11 on:** January 22, 2005, 12:57:35 PM »

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Originally posted by lada
well we are small country, with the only CSA, rest of airliners are from all around world. CSA belongs to goverment, thats true, but their profit is going up year by year.

So its not quite nessesry to pump money into it as you mentioned.

You dont have a country. None showing below your name, I guess you are embarrassed or ashamed, and I am not bothering to guess. Your airline probably is losing money faster than a drunk sailor in a brothel, but they are just lieing to the public about it.

dago

Thrawn · « **Reply #12 on:** January 22, 2005, 01:17:35 PM »

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Originally posted by beet1e
Can I just ask you which countries you were referring to, and in what time frame? Iberia of Spain and TAP of Portugal are state run.

Air Canada was subsidised by our federal government years for all the same socialist excuses. Westjet (Who has the same business model as Southwest Airlines, started taking market share.

Because Air Canada was bulky, and ineffient and has gone tits up. The want the government to bail them out again, the government finally said "No" (whoohoo!).

Now Air Canada is trying to find an angel investor. I'm just glad my hard earned dollars aren't going to prop up a bull**** socialist experiment still stuck in the 70's.

Furball · « **Reply #13 on:** January 22, 2005, 01:20:08 PM »

you have friends in air canada...

and you want them to go tits up?

beet1e · « **Reply #14 on:** January 22, 2005, 01:34:45 PM »

British Airways used to be state run. And what a pig's ear the then Labour Govt made of that.

It was losing money hand over fist - so then when the Conservatives came to power in 1979, Thatcher had a great idea: Why not let the airline be run by people who understand commercial aviation?

It worked. BA was privatised. It went from losing millions to being the most profitable airline in the world. They had to slash the workforce, and some non-profitable routes had to be axed, but what the hell? No point in trying to run an airline as a charity organisation.