By Chris Reiter
WASHINGTON (Reuters) - Delta Air Lines Inc (DAL.N: Quote, Profile, Research, Stock Buzz), which has been a vocal proponent of airline mergers in recent months, is confident it can still be profitable if it remains independent, its chief financial officer said on Thursday.
"When you look at consolidation, you have to look seriously at your stand-alone option," Edward Bastian said at the Reuters Aerospace and Defense Summit in Washington. "We feel very comfortable that our stand-alone plan is viable."
"The plan is working on all facets except one -- the price of oil," he said.
Delta earlier this week said it plans to reduce domestic capacity by 4 percent to 5 percent in 2008 because of concerns about high fuel prices and a softening U.S. economy. The No. 3 U.S. carrier also said the surge in fuel prices may cause it to post an operating loss in the fourth quarter.
By cutting back on unprofitable routes and increasing capacity on lucrative international flights, Delta believes it can overcome higher fuel costs.
"I do think that the business model could be profitable and should be profitable at (an oil price of) $90 a barrel, but it will be a challenge," said Bastian, who is also Delta's president.
With the U.S. economy softening, airlines may struggle to pass along rising costs, he said.
"I'm more concerned about the underpinning of the domestic economy (than oil)," said Bastian. "We're all on the edge of our seats." Continued...
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