Delta Air Lines lost $207.8 million in the last three months of 1990, the worst quarterly performance in the company's history.
The loss, which amounted to $5.01 a share, was attributed to soaring fuel prices in the wake of the Persian Gulf crisis, the recession and discount fares Delta said it was forced to make to compete with the fading Eastern Airlines.Delta had net income of $64.2 million, or $1.13 a share, in the last three months of the year, which is the second quarter of Delta's fiscal year.
"This is the largest quarterly loss Delta has experienced in its history," said Thomas J. Roeck Jr., the Atlanta-based carrier's chief financial officer.
"Skyrocketing fuel prices, a weak economy and unreasonably low domestic fares and promotions initiated by faltering competitors during the quarter contributed to the disappointing results."
Eastern, which went out of business last week, was Delta's main competitor at Hartsfield Atlanta International Airport. As Eastern tried to stay alive during a bankruptcy court reorganization, it turned to offering drastic discounts, which Delta often matched.
Delta's operating revenue for the quarter was $2.13 billion, compared with $2.05 billion for the same period in 1989.
For the 1990 calendar year, Delta lost $154.0 million or $3.77 a share, compared to earnings of $473.2 million or $9.23 a share in 1989. Revenue totaled $8.7 billion, up from $8.6 billion in 1989.
Analysts said they were not surprised by Delta's announcement, noting the last three months of 1990 were tough on the nation's airlines. Last week, American Airlines' parent company reported a fourth quarter loss of $215.1 million.
"The fact that it was the worst quarter in (Delta's) history isn't surprising. It's a standard theme we'll be hearing for the fourth quarter," said Robert Decker, an analyst who follows Delta for Duff & Phelps.
Decker said Delta is strong enough fundamentally to weather the industry downturn. He said Delta's strengths include good administration, a young fleet of jets, a superior route structure and an efficient maintenance system.
Roeck said there are signs that Delta's rebound will come soon. He noted that the price of jet fuel has dropped in the week since the Persian Gulf war began, after a 70 percent increase in the fourth quarter.
Delta has forged ahead with an ambitious expansion plan, including the purchase of new aircraft and the launching of several new routes, despite the economic slump.