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VOL. 125 | NO. 17 | Wednesday, January 27, 2010

Delta Posts Small Loss for Fourth Quarter

HARRY R. WEBER | AP Airlines Writer

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ATLANTA (AP)Delta Air Lines Inc. sees signs that corporate travel demand is picking up as it closed the books on a turbulent 2009 by posting a $25 million loss for the final three months of the year.

The fourth-quarter loss reported Tuesday by the world’s biggest airline was equivalent to 3 cents a share. In the year-ago quarter, Delta lost $1.4 billion, or $2.11 a share. Revenue rose 1 percent to $6.8 billion from $6.7 billion.

Excluding special items, Delta lost 27 cents per share. Analysts surveyed by Thomson Reuters were expecting a loss of 24 cents a share on revenue of $6.86 billion.

Delta, based in Atlanta, reported system capacity will be down 3 percent to 5 percent in the first quarter of this year. A spokeswoman said that prediction is based on reductions already made. Delta previously said that capacity, as measured by available seats times miles flown, is expected to be flat for the full year, compared to 2009.

Delta’s reduced capacity will be felt in Memphis, where the company operates one of its seven domestic hubs.

Delta, coupled with its wholly owned subsidiary Northwest Airlines, accounts for a majority of the passenger traffic at Memphis International Airport. Among major airlines, the two companies flew a combined 47 of 57 average daily scheduled flights and 248,019 of 284,538 passengers in November, the most recent data available.

When taking into account regional and commuter flights, the two airlines have an even bigger share of the traffic here. The airlines’ partners include Atlantic Southeast, ComAir, Compass Airlines, Mesa Airlines, Mesaba Airlines, Pinnacle Airlines, Shuttle America and Skywest Airlines.

Among regional/commuter airlines, the Delta/Northwest network flew a combined 177 of 204 average daily scheduled flights and 419,256 of 485,811 passengers in November 2009.

Weak demand for air travel made for a challenging 2009 for the airline industry. Delta and others cut capacity in response, but profits were hard to come by as fewer business travelers took to the skies.

Airlines lately have seen signs of a recovery in traffic and improving trends in business travel but they’re still faced with higher fuel costs and a tepid economic rebound in most parts of the world.

Still, CEO Richard Anderson said Tuesday that Delta expects revenue per available seat mile – a key airline performance measure – to improve each month of this year.

For all of 2009, Delta lost $1.2 billion, or $1.50 a share, compared to a loss of $8.9 billion, or $19.08 a share, for all of 2008. Twelve-month revenue totaled $28.1 billion, compared to $22.7 billion for 2008.

The major airlines have added special charges to make up for some revenue lost to weak demand, such as baggage fees for domestic flights.

Delta, meanwhile, will invest $1 billion over the next three-and-a-half years to improve customer service, remodel existing aircraft and improve fuel efficiency instead of buying new planes like some of its competitors.

Delta is waiting to hear whether Japan Airlines will dump its alliance with American Airlines and join Delta’s SkyTeam alliance. Delta and its SkyTeam partners would give JAL $1 billion to do so.

American and its partners have offered $1.4 billion for Japan Airlines to stay. Delta is banking on its global network as a greater lure than the money.

There’s been no recent word from Japan about when a decision will be made. Japan Airlines recently filed for bankruptcy protection and is planning a major restructuring.

Delta ended 2009 with $5.4 billion in unrestricted liquidity, a $400 million increase year-over-year. Delta expects the total to increase to $5.6 billion by the end of the first quarter of this year.

Daily News senior reporter Eric Smith contributed to this article.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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