NYTimes.com Article: Delta, American and Northwest Airlines Report Quarterly Losses

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Delta, American and Northwest Airlines Report Quarterly Losses

October 21, 2004
 By THE ASSOCIATED PRESS





By The Associated Press

Delta Air Lines, Northwest Airlines and the parent of
American Airlines all reported losses yesterday. The
largest loss by far was at Delta, where bankruptcy looms
unless it can quickly win concessions from pilots and debt
holders.

Soaring fuel prices were the main culprit for the losses.
All three airlines reported higher revenue.

For the three months ended Sept. 30, Delta, based in
Atlanta, said it lost $651 million, or $5.16 a share,
compared with a loss of $168 million, or $1.36 a share, in
the period a year ago. Delta said it was affected by the
four hurricanes that hit Florida, a major destination for
Delta travelers. Even so, its revenue in the quarter rose
5.9 percent, to $3.87 billion.

Delta said its unrestricted cash reserves fell to $1.45
billion as of Sept. 30, from $2 billion on June 30. The
airline says it needs $1 billion in cuts from its pilots
and new debt terms from some of its creditors. The pilots'
union said in a memo yesterday that its talks with
management will continue through the weekend.

Shares of Delta fell 6 cents, to $2.93.

The AMR
Corporation, the parent of American Airlines, the nation's
largest carrier, reported a quarterly loss of $214 million,
or $1.33 a share; a year earlier it posted a $1 million
profit. Revenue rose 3.3 percent, to $4.76 billion, below
the $4.81 billion forecast by analysts.

The company, based in Fort Worth, said it spent $342
million more on fuel last quarter than in the 2003 period,
turning a potential profit into a loss. The price of jet
fuel on spot markets along the Gulf Coast has jumped from
88.9 cents a gallon at the beginning of the year to $1.56
last week, according to the Energy Department.

Gerard J. Arpey, chief executive of AMR, said American
would take steps to raise revenue and cut costs, including
job cuts and a 5 percent reduction in the airline's
capacity by the first quarter of next year. He offered no
details on layoffs.

Shares of AMR fell 20 cents, to $6.49.

Northwest said it
lost $46 million, or 54 cents a share, in the third
quarter. That was in contrast to a profit of $42 million,
or 49 cents a share, a year earlier. Revenue rose more than
13 percent, to $3.05 billion. Shares of Northwest, which is
based in Eagan, Minn., fell 20 cents, to $7.72.

Continental Airlines reported a $16 million quarterly loss
on Tuesday. The UAL Corporation and US Airways Group, both
in bankruptcy, have not yet reported their third-quarter
earnings.

Known as legacy carriers, the big six airlines had a large
presence in multiple regions before deregulation in 1978.
US Airways is a collection of prederegulation regional
carriers that merged into a legacy carrier.

The big carriers had benefited in the past by operating a
hub-and-spoke system, using big cities as bases for routing
connecting flights to smaller markets. Their market share
in those areas has dwindled, however, as low-fare carriers
have increasingly moved into the big carriers' turf. That
is most evident in the case of Delta, which has faced
competition from AirTran Airways and JetBlue Airways.

Several carriers in recent days have raised the fuel
surcharges on their ticket prices to help offset the high
fuel prices.

"Fuel costs are ultimately going to affect all of the
airlines in some way," said Frank Werner, an industry
expert who teaches finance at Fordham University in New
York.

But he added, "The big carriers are still flailing along
searching for the answer, and they don't have it yet."

http://www.nytimes.com/2004/10/21/business/21air.html?ex=1099387520&ei=1&en=6a052827450633d0


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