Delta loses $257M for 2nd quarter

ATLANTA — Delta Air Lines Inc., the world's biggest airline operator, on Wednesday reported a double-digit drop in unit revenue during the second quarter as demand for air travel continued to slump, but it narrowed its net loss to $257 million from a year earlier when it accounted for big one-time items.

The news followed hefty losses reported by Continental Airlines Inc. and American Airlines parent AMR Corp., while United Airlines parent UAL Corp. posted a small profit. Discount carriers Southwest Airlines Co. and the parent of AirTran Airways also had profits.

Delta executives said they don't expect any meaningful recovery for the remainder of the year, and they also don't expect to be profitable for 2009. Domestic bookings for the third quarter are running 1-2 points behind last year, according to the company.

"We may face some tough choices," Chief Executive Richard Anderson said during a conference call with analysts and reporters.

He didn't say whether that would mean higher fees and fares for passengers and fewer jobs for employees, but he noted that the carrier's responsibility is to "continue to maximize the revenue across our business." Chief Financial Officer Hank Halter told workers in a memo that given the current environment the airline can't guarantee there won't be involuntary furloughs of frontline employees.

Delta has already cut 11 percent of its workforce over the last year, on a combined basis including Northwest Airlines, executives said. Delta has offered voluntary programs in the previous rounds of cuts.

President Ed Bastian said several recent fare increases by major carriers have been successful and Delta hopes the industry is gaining some traction on that.

Delta shares fell 29 cents, or 4.8 percent, to close at $5.77 in Wednesday trading.

The results reported by Atlanta-based Delta for the April-June quarter were equivalent to 31 cents a share, compared to a loss of $1.04 billion, or $2.64 a share, a year earlier. In the second quarter of 2008, Delta recorded special charges totaling $1.2 billion, including a $1.1 billion non-cash charge, net of a $119 million tax benefit, related to the decline in the carrier's market value due to record fuel prices. The price of fuel has fallen substantially over the last year.

Excluding merger-related expenses, Delta would have lost $199 million, or 24 cents a share, in the latest quarter. The airline said it would have posted a profit of $191 million if it were to also exclude $390 million in fuel hedge losses.

Delta is cutting more capacity to weather the downturn.