Answer: When You Lost $314 Million One Year Ago
In the slimmest of
signs the airline may be at the beginning of its recovery from
Chapter 11 bankruptcy, for the first time in recent memory Delta
Air Lines reported losing less money in January than during a
comparable period one year ago.
"While Delta continued to post significant losses in January,
the company is making progress in stabilizing our liquidity and
implementing our business plan," Delta's financial chief, Ed
Bastian, said in a statement to the Atlanta
In its monthly financial statement released Friday, Delta
reported a January loss of $300 million. That's down from the $314
million the carrier lost in January 2005. The airline also ended
the month with $2.1 billion in unrestricted cash available, which
is up slightly from December 2005.
If you remove $87 million in costs related to bankruptcy --
including the cost of renegotiating aircraft and facilities leases,
and attorney fees -- Delta's loss would be a
more-substantially-improved $213 million.
Perhaps most encouraging, however, is the success Delta has had
recently in "hedging" fuel prices. This tactic -- made famous by
Southwest Airlines -- allowed Delta to fix prices for jet fuel at
an average of $1.75 per gallon.
That isn't all that
great -- the average price for Jet-A in the Southeast region is,
you guessed it, $1.75 per gallon -- but should fuel prices
increase, Delta will have at least a portion of its fuel supply
price-protected -- unlike last year, when high fuel prices hurried
Delta's entry into Chapter 11.
Bastian said the airline's renewed ability to enter fuel hedging
contracts, which are based on good credit, or cash reserves, "is
another indication of the progress we are making in our ongoing
efforts to strengthen our financial performance."
By its own estimate, Delta has also been able to reduce its unit
costs, excluding fuel, by 5.3 percent compared to January 2005. If
you include fuel costs, however, overall costs rose 2.7
Unit revenue, however was up almost 13 percent compared to a