Updated from 3:19 p.m. EDT
Delta Air Lines
on Wednesday closed lower for the 14th straight session, amid nagging concerns about the company's finances.
The Atlanta-based carrier said Monday that 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 2 cents, or 0.5%, to $3.70 -- a level unseen in more than 25 years. Shares have fallen about 35% since July 22, the last time they ended with a gain. Two years ago, they were worth about $20.
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 in 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 has a dwindling cash position that 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 last Thursday, and Moody's Investors Service on Tuesday lowered its rating on the carrier's unsecured debt another notch. Several brokerage firms have downgraded Delta's shares this year.