VC - Delta needs your Defense - lost another 651 million

[stealthycat]

http://www.usatoday.com/money/biztra...lta-loss_x.htm

Reservations about Delta climb as slow season approaches
By Marilyn Adams, USA TODAY

Concern is mounting on Wall Street that Delta Air Lines (DAL) is running out of cash and that bankruptcy reorganization may be inevitable even if its pilots give contract concessions soon.
Delta warned last week of a big third-quarter loss and said its cash fell to $1.45 billion as of Sept. 30. Today, the nation's third-largest airline said it lost $651 million, or $5.16 a share, for the three months ending Sept. 30, compared to a loss of $168 million, or $1.36 a share, in the same period a year ago. The current loss includes $5 million Delta paid out in dividends to preferred stockholders.

The previous quarter, it lost $1.96 billion.

Excluding one-time items, Delta said it lost $592 million, or $4.73 a share, in the July-September period. On that basis, analysts surveyed by Thomson First Call were expecting a loss of $4.38 a share, an estimate that had been reduced after Delta warned of its loss last week.

UBS analyst Robert Ashcroft predicted Tuesday that Delta's cash, in the face of relentlessly low fares and high fuel prices, could drop to $1.1 billion by year's end.

He said that would be "uncomfortably low" for Delta to keep flying through the traditionally slow winter season without bankruptcy-court protection.

"We believe Delta is within a month or so of filing Chapter 11," Ashcroft said in his report.

Both Delta and the pilots union declined comment.

Delta has been negotiating intensively with the Air Line Pilots Association to get $1 billion a year in cost cuts. Last week, ALPA reported progress but no agreement. An agreement would have to go to a member vote.

Delta recently announced 10% across-the-board pay and benefits cuts for all its other workers, but they aren't scheduled to take effect until Jan. 1.

The airline's efforts to delay upcoming debt payments wouldn't benefit it until next year.

Industry experts fear the cost cuts won't come soon enough. Atlanta-based Delta, which gets at least a quarter of its revenue from Florida, was hit hard by flight disruptions during four recent hurricanes.

Like most other airlines, it also has been battered by soaring fuel prices and lower fares amid intense airline competition along the East Coast, where Delta mainly flies.

( note : no mention of 9-11 here , huh VC ?? )

Based on Sept. 30 guidance Delta released Friday, it burned about $550 million cash during the quarter, or $6 million a day, a much higher rate than before.

UBS' Ashcroft is the latest in a stream of analysts who are losing hope Delta will stay out of bankruptcy court. Late last week, J.P. Morgan Chase and Morgan Stanley also issued pessimistic reports.

"A pilot deal no longer can save Delta from Chapter 11," Morgan Stanley analyst William Greene wrote.

Tuesday, analyst Philip Baggaley of credit-rating firm Standard & Poor's agreed that pilot concessions "don't assure Delta can stay out of bankruptcy given their rate of bleeding."

If Delta files for bankruptcy-court protection, it would become the third major U.S. airline in bankruptcy-court protection, joining United and US Airways.

Through mid-2004, Delta has lost $5.6 billion since the beginning of 2001. That's more than any other airline except the larger United.

Delta is carrying $21 billion in debt and a labor contract that pays senior pilots as much as $300,000 a year, the highest rates in the industry.


Sounds like a banging business VC - 21 billion ? Are you freaking kidding me !! LET IT DIE !!!!!!!!!!

[kevin1]

An open letter to the bankruptcy court:
SHUT THEM DOWN AND SELL THEIR ASSETS !

It's pretty obvious by now that their management is too incompetant to run the company , don't bail them out just so they can perpetrate this legal travesty again next year . [:@]

[virginiaJim]

kevin1 is right, thats what the government does to mom and pop shops all day long. why is delta any different, Im sure some group will jump in and buy them at a discount and run it better and save most of the jobs. One mans loss is anothers gain. its the unions mixed in with crappy service that does this to the big businesses anyway. I say put some heat on them and make their employees work for a living.

[Aught Six]

its the unions mixed in with crappy service that does this to the big businesses anyway. I say put some heat on them and make their employees work for a living.

Yes, sir, indeed.

[stealthycat]

VC will try to explain that airlines are vital, without them everything will collapse into an abyss of no return. He'll point to the Chrysler bailout and how brilliant that all worked out.
He'll say that 9-11 was the huge blow that sank an already leaking ship. He'll contend that tens of thousands of people rely on airlines - that by letting the fail would mean economic failure.

I've argued him for 3 years on this.

Let United die. Let US Airways die. Let Delta die. 50 billion in debt over 3 years is NOT GOOD BUSINESS. The whole concept of business revolves around making a profit. SW does it. Jet Blue does it. Others do it ......... why can't these ?

Did we race to save Hyundai ? Did we race to save K-Mart ? Did we race to save Joe Blow's Chicken Livers and Gizzards restraunt chain ? Why no - open business allowed them to start up, run and consequently fail.

And so be it -

[logs]

The airlines are vital but who ever said we need to bail them all out. Let one of them go belly up and the others, Unions, management and Administration will get the message. The other airlines will pick up the gates, the routes and fill the need. There will be competiton for the left over business. There are more than enough seats and flights to go around to meet the passanger needs.
Very few flights are 100% revenue seating so there are plenty of seats for all the traveler, leisure and business. The other airlines will become more efficient and pick up the slack or fall by the wayside.
Those displaced workers will learn that $35 to $47 dollars an hour for a flying waitress (more like an usher since most don't serve food) is over pay and have to get a job in the real world of the 40 hour week for reasonable pay. Than they can go thank the union for their big promises.
That is how it is supposed to work. Just maybe we have to many airlines and not enough business????
My wife handle the pay for an airline and don't let anybody kid you. From the top down to the entire inflight staff the pay is great. The ramp people, clerical and maintance are on the low end of the private sector. Most rampers get little more than $8 and hour and work split shifts under the harshest conditions. Machanics make about the same as certified auto mechanic and considering how exact and perfect they must be I think they should make more than the flight attendents but they either make less or about the same per hour worked. Plus the flight attendents and crew get per diem (sp) for any time away from there home base.
Yes the airline are a major part of the US economy so lets start treating them as such and get them off welfare.
How many trucking companies, a very vital part of our economy get bailed out. I have never heard of it. If one goes belly up, some one else picks up the new business and make it work.

[wesleykey]

The airlines are vital but who ever said we need to bail them all out. Let one of them go belly up and the others, Unions, management and Administration will get the message.

I Agree.

[stealthycat]

logs - Thats been my point all along - good analogy with the trucking companies.

[Popere]

I agree with Kevin. Shut them down and sell off their assets. We need to send a message to these big companies that they can't just poorly manage their companies and run them into the ground and then expect to be bailed out.

[vc1111]

The airlines are vital but who ever said we need to bail them all out.

Uh, that would be the Congress of The United State of America in the wake of the worst attack on American soil in the history of this nation...and it involved passenger planes. That ring a bell? It was in all the papers. But you are right on one thing...they are vital.

VC will try to explain that airlines are vital, without them everything will collapse into an abyss of no return. He'll point to the Chrysler bailout and how brilliant that all worked out.
He'll say that 9-11 was the huge blow that sank an already leaking ship. He'll contend that tens of thousands of people rely on airlines - that by letting the fail would mean economic failure.

And vc will be dead nuts on the money if you can maintain an intelligent discussion on the subject and focus on the bailouts in the context under which they occurred...in the immediate aftermath of 9/11, a time in which vast and incredibly expensive security measures had to be immediately imposed, a time when at one point, all planes, ALL of them had been grounded for fear of another attack, and a time when Americans did not know when and if another plane would be hijacked. Tens of thousands of people work for the airlines then and now. There would have been massive layoffs, and massive airline bankruptcies. The economy flagged terribly anyway without the ripple effect caused by those layoffs that did NOT take place on anywhere near the scale that they would have without the bailouts. As it was, people simply refused to fly for a time. There were many other peripheral travel industries that suffered along with business in general as a result. If the airlines had gone under in large numbers, we quite possibly could have slipped into a very, very deep recession or worse. Anyone remember what the stock market did in the months that followed?

Oh, and by the way, Stealthycat, the Chrysler bailout was brilliant. Now its been quite a few years since it occurred, but I have no doubt that you are rubbing your hands waiting for them to financially hiccup so you can scream about what a waste that was too. Never mind the successes, focus on the failures, right?

Its easy to sit back now that we have some semblance of security and drool out cliches about how they should be making a profit and how we should have simply let them sink or swim after 9/11...but Congress decided in the aftermath of 9/11 that it would not allow the entire industry to go belly up...Congress decided to prevent having the terrorists gain yet another victory by way of potentially having wholesale bankruptcy in the airline industry, and an already teetering economy hammered even harder by massive national layoffs around every major airline hub across the country.

And that is what I supported, not the images of throwing money at them from 9/11 until forever as Stealthycat would have you believe.

Kevin1:

...don't bail them out just so...

What article did you read, Kevin? Did I miss something? Whose calling for bailouts today? Stealthycat? Certainly not the airline or the industry for that matter, and certainly not me. Stealthycat has you frothing as you wrestle with straw men.

The bailouts that occurred in the wake of 9/11 almost certainly saved the industry and thousands upon thousands of jobs. I supported it then, as did most of this country's best and brightest leaders. That Stealthycat is lacking the acumen to comprehend the necessity in the wake of the worst terrorist attack on American soil in this nation's history...is not my problem. Hey, if an airline fails now, it fails. But it won't be because Al Quada put the entire industry under.

Today as we are recovering economically, and 3/4 of Al Quada are in jail or dead, and the war on Terror is progressing nicely, its easy to be cute and make jokes like Stealthycat is doing about the matters economical that occurred in the days right after 9/11. But anyone with half a brain knows that it was no joke.

Look at Stealthycat's signature photo. Ironic, isn't it? Apparently on 9/11 most people in our Congress were a tad more in tune with what hit that building and what it meant than Stealthycat appears to have been.