Despite a global recession that will lead it to cut international capacity by 10% in September,
(DAL - Get Report)
reasserted Tuesday that it will be profitable in 2009.
"We are expecting this year to be a profitable year," President Ed Bastian said Tuesday, at the JPMorgan Aviation and Transportation Conference. "We are planning to generate strong free cash flow this year." He said a second-quarter profit is likely.
The first quarter, however, will produce a loss, a result of reduced demand in a historically weak travel period, "a tremendous amount of fuel hedging losses" and Easter's occurrence this year in April rather than March. Bastian said first-quarter operating revenue will fall by 14%, though he noted: "It looks like the revenue period is stabilizing. It's not getting worse, from what we've seen."
Overall, Delta revenue is growing, up more than 8% in 2008. Liquidity is also rising, expected to reach $7 billion at year-end, up from $6 billion at the end of 2008, Bastian said.
However, demand remains weak, with transatlantic revenue particularly weak, according to both Bastian and conference speaker Jeff Smisek, president of
(CAL - Get Report)
. Delta's planned cutbacks will reduce transatlantic capacity by 11% to 13% and trans-Pacific capacity 12% to 14%. They augment previously announced systemwide cutbacks of 6% to 8%.
Bastian also moved to counter speculation that a regulatory filing indicated Delta will not take delivery of 18 new 787s from
(BA - Get Report)
. The orders came with the
October acquisition of Northwest
In the recent filing with the
Securities and Exchange Commission
, Delta said it had dropped the aircraft from its 10-K report on new orders. "We have excluded from [the report] our order for 18 B-787-8 aircraft," Delta said, because Boeing has said "it will be unable to meet the contractual delivery schedule for these aircraft."