This article from NYTimes.com has been sent to you by psa188@juno.com. Delta Air Posts Loss, but Beats Estimates January 16, 2003 By REUTERS Filed at 2:43 p.m. ET CHICAGO (Reuters) - Delta Air Lines Inc. (DAL.N) on Thursday reported a quarterly loss that was nearly halved from a year ago, but it does not see a return to profitability this year as demand for air travel remains weak. Delta, the third-largest U.S. airline, reported a $363 million loss in the fourth quarter as major U.S. carriers continued to suffer from a historic travel downturn that has kept airfares cheap nationwide. Like Continental Airlines (CAL.N), which kicked off the airlines' reporting season with a narrower-than-expected loss on Wednesday, Delta beat Wall Street estimates. Analysts said that was mostly due to good holiday air traffic in December. But the outlook is far from rosy. U.S. airlines are still in the midst of the worst financial crisis they have ever faced, racking up a total industry loss of about $8 billion to $10 billion in 2002. ``As we said, we've projected a loss for the upcoming quarter,'' Chief Executive Leo Mullin said on a conference call with analysts and media. ``I would add that there is an expectation here at Delta that we would have a loss for the year, I think most of you would anticipate that.'' Delta is trying to do a number of things to cope with the downturn. One is to use many more regional jets in 2003. LOW-FARE LOVE-IN After studying its competition, Atlanta-based Delta also is planning to launch a low-fare carrier to battle Southwest Airlines Inc. (LUV.N), JetBlue Airways Corp. (JBLU.O) and AirTran Holdings Inc. (AAI.N). Bankrupt United Airlines, a unit of UAL Corp. (UAL.N), is also planning some sort of low-fare initiative as fewer passengers are willing to pay for high-priced tickets. United, the world's second-largest airline, filed for bankruptcy on Dec. 9 because it could not pay its debts, following smaller US Airways Group Inc.'s (UAWGQ.OB) similar move in August. Delta said its loss per share was $2.98 in the fourth quarter. That compared with a loss of $5.98 per share, or $734 million, in the year-earlier quarter just after the Sept. 11, 2001, attacks slashed the demand for travel. Revenue rose to $3.31 billion in the quarter from $2.86 billion previously. Shares of Delta rose slightly in Thursday afternoon trading on the New York Stock Exchange, gaining 11 cents to $12.86. The airline will be cutting another 8,000 jobs by May 1, about half through layoffs, to cope with weak revenue and losses. Once those job cuts are complete, Delta will have cut its work force by about 16,000 people, or 20 percent, since the attacks. On an operating basis, Delta posted a loss of $230 million or $1.90 per share. Analysts' mean estimate was for a loss of $2.30 a share for the quarter and a loss of $8.28 per share for 2002, according to market research firm Thomson First Call. ``As was the case for Continental, the quarter ended well for Delta on strong holiday traffic,'' said JP Morgan analyst Jamie Baker. He noted that Delta's revenue rose more than he expected in the quarter, up 15 percent. Continental on Wednesday posted a fourth-quarter net loss of $109 million. ``2002 was a very difficult year that ended on a high note,'' Baker added. ``That doesn't necessarily bode well for 2003.'' Ray Neidl, an analyst at Blaylock & Partners, has a hold rating on Delta. ``Even at Delta's current low stock price, near bankruptcy levels, we maintain our hold rating,'' he said. ``We do not see any sustained stock price rally until profitability returns. But we also see no major immediate threat of default, which would drive down the stock price further.'' BIG SHORTFALLS Like most major U.S. airlines, Delta is suffering what it has called ``unsustainable losses'' more than a year after hijackers took over four commercial jetliners, crashing two of them into the World Trade Center and a third into the Pentagon, killing about 3,000 people. Delta's net loss for the full year 2002 was $1.33 billion or $10.44 per share. The airline took a larger-than-expected pension-related charge of $1.6 billion in the fourth quarter but had positive cash flow from operations of $177 million. Even after paying for non-aircraft items, Delta said its cash flow was ``slightly positive'' for the quarter, and it ended up with cash and short-term liquidity of $2.6 billion, of which $2.0 billion was unrestricted. Delta said the pension charge was bigger than the $700 million to $800 million it anticipated because of lower interest rates and pension plan asset values since its original estimate. Delta's share price fell nearly 60 percent in 2002 as a modest industry rebound early in the year had dissipated by April. http://www.nytimes.com/reuters/business/business-airlines-delta-earns.html?ex=1043752274&ei=1&en=debb52becf801176 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company