Delta Air Lines, which narrowly avoided bankruptcy last year, on Thursday said its quarterly loss nearly tripled to USD$1.1 billion as it struggled with pension costs and record fuel prices amid tough competition.
The carrier, which has also been hit by high pension costs, has cut costs aggressively over the past year. Still, analysts remain concerned about the carrier's cash problems.
"Based on current estimates... Delta requires at a minimum USD$500 million additional liquidity to merely limp into 2006," JP Morgan's Jamie Baker wrote in a research note on Thursday.
Delta posted a loss of USD$1.1 billion compared with a loss of USD$383 million a year earlier.
Excluding one-time charges, Delta would have posted a net loss of USD$684 million. Revenue rose 3.3 percent to USD$3.65 billion.
Delta said it ended the quarter with USD$1.8 billion in unrestricted cash, cash equivalents and short-term investments.
A bill introduced on Wednesday would allow airlines to spread across 25 years pension payments that are due within four years.
The Atlanta-based carrier, which in September developed a plan that would save it USD$5 billion in annual benefits by 2006, on Thursday said it has achieved USD$2.3 billion of that goal, and is on track to achieve the remaining USD$2.7 billion.
Grinstein said the main problem is high fuel costs. "The issue is simple: including fuel, Delta is not on plan, but excluding fuel, we are better than plan."
When asked by an analyst if high fuel prices might force the carrier to renegotiate with its lenders, Grinstein said it would be "fair" to say the creditors might give the airline some "additional leeway" if it came close to violating its agreements.
Grinstein also said the carrier was in "constant dialogue" with lenders General Electric and American Express.
Another challenge for the airline is intense competition on the east coast. "As Delta derives a material portion of its revenue from that region, we believe it could be at risk for further earnings reductions until the excess capacity is withdrawn," Merrill Lynch analyst Michael Linenberg wrote in a research note.
