Despite a global recession that will lead it to cut international capacity by 10% in September, Delta ( DAL) 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 Continental ( CAL). 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 Boeing ( BA). 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."

Bastian acknowledged that the language, sought by Delta's attorneys, "provoked a lot of controversy." But he noted: "We still have a firm order book on the 787 (and) no one should read anything into our 10K disclosure that we've made any decision about changing course."

He indicated the key issue is the delivery schedule for the long-delayed aircraft and said the two parties are talking. "We'd already have eight flying at this point in time had Boeing been able to deliver," he said.

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