Fuel costs, charges drag Delta to $1B loss
Delta Air Lines landed deep in the red in the second quarter, following a 115 percent jump in its fuel costs and a $1.1 billion charge for goodwill impairment.
The Atlanta-based airline (NYSE: DAL), which is set to merge with Northwest Airlines Corp. (NYSE: NWA) by the end of the year, posted a loss of $1 billion, or $2.64 a share, on $5.5 billion in revenue. This compares with earnings of $164 million, or 42 cents a share, on $3.5 billion in revenue in the second quarter of 2007.
Second quarter fuel costs were $1.7 billion, compared with $790 million in the second quarter of 2007.
Delta hedged 49 percent of its fuel consumption for an average fuel price of $3.13 a gallon. Delta realized $313 million in gains on fuel hedge contracts settled during the quarter.
Delta also recorded a $1.1 billion charge for impairment testing, including third-party valuation procedures, in the second quarter. It also took a $96 million severance charge for its voluntary workforce reduction programs and a $6 million charge for facilities restructuring.
Delta expects system capacity for the second half of 2008 to be down 4 percent, with domestic capacity down 13 percent and international capacity up 14 percent pay day loan low fee cash advance. Delta said it wants to remove the equivalent of 100 regional aircraft from the system by the end of the year.
Through revenue and cost initiatives, including expansion of its international network and fuel hedging, Delta said it expects to cover $3 billion of an estimated $4 billion raw impact of higher fuel input costs in 2008.
Delta is the third-largest carrier at the Miami and Fort Lauderdale-Hollywood international airports, and the second-largest carrier at Palm Beach International Airport.