Delta, Northwest post $10.5 billion in losses - KSWO 7News | Breaking News, Weather and Sports

Delta, Northwest post $10.5 billion in losses

Atlanta_Delta Air Lines, the nation's third-largest carrier, said Wednesday its loss widened in the first quarter to a whopping $6.39 billion, largely because of a special charge related to a steep decline in the company's market value blamed on soaring fuel prices.

Also, Northwest Airlines, which last week agreed to combine with Delta to create the world's largest airline, reported a $4.1 billion loss for its first quarter Wednesday. The combined loss from the two airlines comes to $10.5 billion.

Delta's results badly missed Wall Street expectations, despite a 12 percent increase in sales.

The Atlanta-based company said the loss is equivalent to $16.15 a share. That compares with a loss of $130 million that Delta reported in the year-ago January-March quarter, when it was still in bankruptcy.

Excluding special items, primarily a $6.1 billion non-cash charge relating to the decline in Delta's market value, the airline lost $274 million, or 69 cents a share, in the first quarter.

Analysts were expecting a Delta loss of 49 cents a share, excluding one-time items.

Revenue in the quarter rose to $4.77 billion, compared with $4.24 billion recorded in the same period a year ago.

Delta said its first-quarter loss before special items was driven by a $585 million year-over-year increase in the cost of fuel.

When it exited Chapter 11 protection, Delta projected its stock would be worth $9.4 billion to $12 billion in all, but that was assuming the price of crude would be at $70 per barrel.

Gas and oil prices pushed further into record high territory Tuesday, with crude nearing $120 a barrel. Retail gas reached a national average of $3.51 a gallon for the first time. Delta's current market value is roughly $2.6 billion, based on 395.6 million shares outstanding, which include shares not yet distributed to some creditors from its bankruptcy case.

Delta announced last week that it would acquire Northwest Airlines Corp. in a stock-swap deal that, if approved by regulators and shareholders, will create world's largest airline.

"Our need to respond to the pressures of dramatically rising fuel costs and a softening U.S. economy drove us to take a closer look at all options to protect Delta's future," Chief Executive Richard Anderson said in a statement. "The merger with Northwest will create an airline with the size, scale and global presence to weather economic downturns and compete long-term in the global marketplace."

The airlines are trying to sell the deal to the public, employees, federal regulators and Wall Street. So far, investors appear unconvinced.

The stock declines since the deal was announced have shaved roughly $1.3 billion off the value of the deal to Northwest shareholders, who would get 1.25 Delta shares for every Northwest share they own.

Anderson will head the combined airline, which would be called Delta and be based in Atlanta.

The carriers have said they have no current plans to cut more U.S. flights beyond what they have disclosed separately. Analysts have said that limits the cost savings or higher fares the airlines could reap from the deal.

The companies haven't ruled out further capacity cuts in the future if fuel prices continue to rise. Delta reiterated that sentiment Wednesday, saying it is continuing to evaluate the fuel and demand environment "and will make proactive changes quickly if economic conditions warrant."

As of March 31, Delta said it had $3.6 billion in unrestricted liquidity, including $1 billion available under a revolving credit line.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • Local NewsNewsMore>>

  • Dems pick 'firsts,' GOP goes for Trump fave in primaries

    Dems pick 'firsts,' GOP goes for Trump fave in primaries

    Wednesday, August 15 2018 2:21 AM EDT2018-08-15 06:21:11 GMT
    Wednesday, August 15 2018 5:14 PM EDT2018-08-15 21:14:52 GMT
    (AP Photo/Charles Krupa). Vermont Democratic gubernatorial candidate Christine Hallquist, center, a transgender woman and former utility executive, is greeted by her supporters during her election night party in Burlington, Vt., Tuesday, Aug. 14, 2018.(AP Photo/Charles Krupa). Vermont Democratic gubernatorial candidate Christine Hallquist, center, a transgender woman and former utility executive, is greeted by her supporters during her election night party in Burlington, Vt., Tuesday, Aug. 14, 2018.

    Democrats in Vermont have nominated the nation's first transgender candidate for governor, one of many firsts from Tuesday's primaries.

    Democrats in Vermont have nominated the nation's first transgender candidate for governor, one of many firsts from Tuesday's primaries.

  • Jury awards $289M to man who blames Roundup for cancer

    Jury awards $289M to man who blames Roundup for cancer

    Saturday, August 11 2018 2:10 AM EDT2018-08-11 06:10:04 GMT
    Wednesday, August 15 2018 5:14 PM EDT2018-08-15 21:14:37 GMT
    (Josh Edelson/Pool Photo via AP, File). FILE - In this July, 9, 2018, file photo, plaintiff DeWayne Johnson looks up during a brief break as the Monsanto trial in San Francisco. Monsanto is being accused of hiding the dangers of its popular Roundup pro...(Josh Edelson/Pool Photo via AP, File). FILE - In this July, 9, 2018, file photo, plaintiff DeWayne Johnson looks up during a brief break as the Monsanto trial in San Francisco. Monsanto is being accused of hiding the dangers of its popular Roundup pro...

    Lawyers say a jury's $289 million award to a California man who claims Monsanto's Roundup weed killer gave him cancer may open the floodgates for legions of people suffering because of the agribusiness giant.

    Lawyers say a jury's $289 million award to a California man who claims Monsanto's Roundup weed killer gave him cancer may open the floodgates for legions of people suffering because of the agribusiness giant.

  • White House called toxins contamination 'PR nightmare'

    White House called toxins contamination 'PR nightmare'

    Monday, August 13 2018 1:38 AM EDT2018-08-13 05:38:00 GMT
    Wednesday, August 15 2018 5:14 PM EDT2018-08-15 21:14:28 GMT
    Officials are demanding that the EPA act quickly to clean up local water systems testing positive for dangerous levels of PFAS. (Source: Raycom Media)Officials are demanding that the EPA act quickly to clean up local water systems testing positive for dangerous levels of PFAS. (Source: Raycom Media)

    Officials are demanding that the EPA act quickly to clean up local water systems testing positive for dangerous levels of chemicals used in nonstick cookware, fast-food wrappers and much more.

    Officials are demanding that the EPA act quickly to clean up local water systems testing positive for dangerous levels of chemicals used in nonstick cookware, fast-food wrappers and much more.

Powered by Frankly