Delta, Northwest Tally $10.5B in losses

01 May 2008

Delta and Northwest, seeking to combine and create the world's largest airline, posted losses Wednesday totaling $10.5 billion for the first three months of the year because of exorbitant fuel prices and write-downs of their companies' value. "All airlines are in the same boat," said Calyon Securities analyst Ray Neidl. "The industry cannot make money in the current ticket-fare level. Seats have to come out of the market. To cover higher fuel costs, airfares have to go up," he said. Delta Air Lines, the nation's third-largest carrier, said its loss widened in the first quarter to a whopping $6.39 billion. A few hours later, Northwest Airlines reported a $4.1 billion loss for the period. Delta reported a 12% increase in sales; Northwest sales were up 9% in the quarter. (AP; www.OrlandoSentinel.com/Business; Pages B1, Wall Street Journal; C2, New York Times; 3B, USA Today)

* Bad news from the U.S. airline industry will almost certainly mean higher ticket prices for passengers soon. "You'll have higher fares," said Vaughn Cordle, a Washington-based analyst for AirlineForecast. "It's an ugly picture out there." Some analysts say AirTran Airways and other low-cost carriers, stung by the impact of high fuel costs, will have a more difficult time than major carriers weathering the pressures. They are likely to raise ticket prices, and some may even fold, the analysts say. AirTran a day earlier reported a $35 million quarterly loss. (www.AtlantaJournal-Constitution.com/Business