Delta reports narrower 4Q loss, misses expectations

Wednesday, January 14th 2004, 12:00 am
By: News On 6

ATLANTA (AP) _ Delta Air Lines reported a narrower fourth-quarter loss on higher revenues, but still missed Wall Street expectations and said it still faces many hurdles in becoming profitable again.

The nation's third-largest airline said Wednesday that for the three months ending Dec. 31 it lost $332 million, or $2.69 a share, compared to a loss of $367 million, or $2.98 a share, for the same period a year ago. The loss includes $5 million paid out in dividends to preferred shareholders.

Excluding one-time items, Atlanta-based Delta lost $207 million, or $1.71 a share, in the quarter. Analysts surveyed by Thomson First Call were expecting a loss of $1.66 a share without one-time items.

Revenue in the October-December period was $3.4 billion, a 2.7 percent increase from $3.31 billion a year ago.

``Today's financial results are disappointing, especially given the expected performance of the other air carriers,'' said Gerald Grinstein, Delta's chief executive officer. He said ``2003 was a year full of significant financial challenges for Delta. While we have made progress in addressing these challenges, Delta still faces many hurdles in 2004.''

Delta executives have been trying to cut costs for more than a year to try to return the airline to profitability. Delta, which is still seeking significant wage concessions from pilots, has laid off 16,000 employees since the 2001 terrorist attacks.

Delta executives said Wednesday that without the cuts so far, things could be much worse for the airline. Delta said it recorded $700 million in net cost savings and revenue benefits in 2003 through its profit improvement plan. It attributed the savings to productivity gains resulting from the additional use of technology and the work of employees.

Grinstein, who took over from Leo Mullin as CEO on Jan. 1, said Delta will continue to focus on reducing costs and improving customer service.

Still, analysts say the bottom line is Delta must get cost concessions from pilots if it is to become profitable again. The company is seeking a 30 percent pay cut from pilots, who are offering only 9 percent and to forego a 4.5 percent raise they are due in May, according to the pilots union.

No formal negotiation sessions between the two sides have been held since early December. Pilots union spokesman Chris Renkel said in a memo to pilots that union leaders were to wrap up a three-day special session on Wednesday in which they were to talk about the issue. Renkel said the union is awaiting another proposal from management.

For all of 2003, Delta lost $790 million, or $6.40 a share, compared to a loss of $1.29 billion, or $10.44 a share, in 2002. The loss includes $17 million paid out this year in dividends to preferred shareholders. Full-year revenue was $13.3 billion, the same as it was in 2002.