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Delta CEO: ‘Time is of the essence’
Delta Air Lines has reported an average loss of over $150 million per month for the last quarter.
The airline, which is struggling to avoid entering into Chapter 11 bankruptcy proceedings, said third quarter losses reached $646 million. This compares to a loss of $164 million year-on-year.
Delta’s chief executive Gerald Grinstein gave a grim statement: “As Delta’s financial situation continues to deteriorate, time is of the essence”.
Load factors for the third quarter were 78% – up from the same quarter last year – but Delta says this was driven by restoration of capacity following the war in Iraq.
Like its competitors, Delta is also suffering from the extra pressure of rising fuel prices. It estimates its fuel bill for 2004 to be a record sum, exceeding previous years’ total fuel costs by around $950 million.
The airline has announced a “transformation plan” in a bid to cut $1 billion per year in pilot costs alone.
Meanwhile, American Airlines reported a net loss of $214 million in the third quarter, against a net profit of $1 million the same time last year.
The carrier blamed three “dramatic and harmful” events for the plunge into the red – record high fuel prices, a “weak revenue environment” and the unprecedented series of hurricanes which hit the US during the period.
American is to withdraw 15 aircraft next year and is postponing delivery of others to regional arm American Eagle. As reported, the airline is to start charging fees for paper tickets purhased through travel agents in some European countries and it is to consolidate its reversations offices in Dallas to cut costs and increase efficiency.
Further international expansion will go ahead with plans to incease services between the US and Asia in an effort to increase revenue.
American’s chairman and chief executive Gerard Arpey warned that high fuel prices would continue into the seasonally weaker fourth quarter, resulting in a “significantly larger” loss than the last three months.
He said: “The harsh reality is that despite our tremndous progress to date, our cost structure remains too high for us to succeed in a world where the price of oil is at such an extraordinary level.”
Report by Ginny McGrath and Phil Davies
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