Delta Air Lines
Tuesday fell for the thirteenth straight session, amid nagging concerns about the company's finances.
The Atlanta-based carrier Monday said it would tap into its cash reserves to cover some operating costs as it continues to lose money at an alarming rate.
Shares fell another 35 cents, or 8.8%, to $3.63 -- a new 52-week low and a level unseen in more than 25 years -- .having shed 3.2% Monday. Shares have fallen more than 35% since July 22. Two years ago, they were worth about $20 a share.
In an 8-K filing with the
Securities and Exchange Commission
, released Monday morning, Delta warned that its cash-burn rate will continue at the same pace as the first two quarters of 2004, when the carrier's cash dropped from $2.7 billion to $2 billion.
"Lower-than-anticipated domestic passenger mile yields and higher-than-expected aircraft fuel prices have caused our actual and projected cash flows from operations for 2004 to be significantly lower than we had projected at the beginning of that year," said the company, in the filing. "As a result, we plan to use a portion of our cash reserves to pay certain obligations that we previously anticipated would be paid from cash flows from operations."
Suffering from deep losses, working to cut costs at any cost and unable to raise capital without taking on onerous terms, Delta's dwindling cash position puts it one step closer to bankruptcy protection.
The company said it will need $1 billion in pay cuts from unionized pilots to avert a Chapter 11 filing. In July, pilots put a $700 million offer on the table, and discussions over pay cuts will likely heat up at the end of the month after Delta management unveils its top-to-bottom restructuring plan to save the airline.
"We are intensively engaged in an effort to identify and obtain cost reductions from our key stakeholders, and to implement new strategic business initiatives in order to effect a successful out-of-court restructuring, but there can be no assurance this effort will succeed," the company said.
The news is the latest sign of trouble for Delta. Fitch Ratings downgraded the company's debt on Thursday, while several brokerage firms have downgraded its shares this year.