Delta Has Loss for Quarter; Sees '09 Profit

Delta Air Lines ( DAL) reported a loss for the final quarter of 2008, but the world's largest carrier said Tuesday that it will be "solidly profitable" this year.

The airline said its fourth-quarter loss, excluding certain items, was $340 million, or 50 cents a share. That figure does include a noncash loss of $80 million, or 12 cents a share, related to the acquisition of Northwest, without which the loss would have been 38 cents. Analysts surveyed by Thomson Reuters had estimated a loss of 34 cents.

Including a charge of more than $900 million for employee equity awards and a $91 million loss for unrealized fuel hedges, Delta's loss was $1.4 billion, or $2.11 a share. The results include Northwest's operations between Oct. 30 and Dec. 31.

Combining the two carriers' operations for the quarter, revenue was $6.7 billion, little changed from a year earlier, on a 4% capacity decline. Delta saw a 3% increase in passenger revenue per available seat mile. "These results reflect the weakening of the revenue environment during the quarter caused by the global economic recession," Delta said.

Cargo revenue fell 24%, due primarily to reductions in Northwest's freighter capacity. However, other revenue increased 17%, or $121 million, mainly because of higher revenue from baggage fees.

Looking ahead, Delta said it expects to turn a profit this year despite a difficult economy and a 4% decline in consolidated passenger RASM. "Despite the difficult economic environment, we expect to be solidly profitable in 2009 driven by lower fuel costs, capacity discipline and merger synergies," said CEO Richard Anderson in a prepared statement.

Added President Ed Bastian: "We expect the worldwide economy to be difficult throughout 2009; however, if fuel prices remain at current levels, we believe the benefit of lower fuel prices will more than offset the revenue decline."

Delta believes the merger with Northwest will result in savings and benefits of $500 million this year. Delta has already placed its code on more than 90% of Northwest's routes and has rebranded 50 airports where Northwest operates.

The airline said it will reduce capacity by 6% to 8% in 2009, removing 40 to 50 aircraft from its mainline fleet, following an 11% cut in domestic capacity during the last six months of 2008.

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