* 'Fairly significant' fuel hedge loss in 2009-president
* CEO says consolidation will help spur return to capital
* Q4 trends showing improvement
(Adds cash flow estimate, pensions)
WASHINGTON, Dec 15 Delta Air Lines Inc (DAL.N)
forecast a $1.1 billion net loss for 2009 due to losses in its
fuel hedges but said revenue trends in the fourth quarter
suggested a better 2010.
"There is a fairly significant fuel hedge loss embedded in
those numbers," Delta President Ed Bastian told attendees at
its annual investor day on Tuesday. He added that the losses
were incurred earlier this year.
Delta's shares fell nearly 4 percent in morning trading but
regained most of that by midday -- trading off less than 1
percent on the New York Stock Exchange at $10.99.
Recession has sapped corporate and consumer demand for air
travel this year, leading to a drop in revenue for the global
airline industry. Delta, like other airlines, has responded by
But executives at the world's largest airline said
fourth-quarter trends were showing a marked improvement from
earlier in the year. For example, the volume of tickets sold to
corporate clients rose almost 15 percent over the last couple
weeks, Bastian said.
The company now expects an operating margin of 1 percent to
2 percent for the fourth quarter. Earlier, it was expecting a
break-even quarter. It also expects unchanged capacity in
In a U.S. Securities and Exchange Commission filing
released ahead of its investor day presentation, Delta also
indicated that unit revenue would be down 1 percent in
December, a smaller rate of decline compared with previous
The airline expects unit revenue to turn positive in the
first quarter, on a year-over-year basis. Unrestricted
liquidity would be $5.3 billion by year's end, Delta said.
Executives said they want to maintain minimum liquidity at the
$5 billion range in 2010.
This trend is another data point offering "real tangible
evidence that a recovery is under way," Bastian said.
If current trends persist, the airline projects it could
see about a 7 percent increase in baseline revenue from
passenger traffic in 2010.
Delta expects operating cash flow of $2.3 billion in 2010
and will use a significant portion of that to pay down debt.
The company estimates $700 million in pension funding for the
The global airline industry is expected to lose $5.6
billion next year, due to rising fuel costs, according to new
data from industry group International Air Transport
North American carriers are likely to lose $2 billion in
2010, besting their European counterparts, which are expected
to shed $2.5 billion.
In his opening remarks, Chief Executive Richard Anderson
said consolidation would help the industry reach sustained
"Over time, more consolidation will help this business
model evolve to a return on capital," Anderson said.
Delta acquired Northwest Airlines last year, and that
merger was "a very significant step, a step that ought to be
taken in more than just the case of Delta/Northwest," Anderson
(Reporting by Karen Jacobs and Deepa Seetharaman; Editing by
Lisa Von Ahn, Maureen Bavdek and Steve Orlofsky)