Most Of That Is Tied To Bankruptcy Charges

We have a new "winner" in the contest of which US airline managed to lose the most money in the first quarter of 2008... by a significant margin. On Wednesday, Delta Air Lines posted a staggering $6.4 billion loss -- that's not a typo -- for the first three months of the year. The carrier attributed the mind-numbing loss to high fuel prices, and a slumping US economy.

Most of that loss -- $6.1 billion -- was through a noncash charge related to the carrier's previous stint in Chapter 11, reports Reuters. That "goodwill impairment" hit the carrier due to Delta's loss of market share, again linked to US economic factors and the impact of Delta's time in bankruptcy.

Without that hit, and other special items, Delta lost $274 million for the quarter... a far more palatable figure, in context, and in line with losses carriers such as American ($328 million) and United ($537 million) have posted for Q1 2008. To date, only low-cost carrier Southwest Airlines has posted a Q1 2008 profit, though even its $34 million posting in the black is far off that carrier's past performance numbers.

Delta's Q1 2008 posting is also a significant step back from the $130 million the airline lost in QI 2007, when Delta was still in bankruptcy... and was far worse than investors had predicted. Delta's loss works out to a 69 cents-per-share hit, compared to the 55-cent loss analysts had expected.

Those same industry analysts point to Delta's staggering Q1 numbers as further evidence the carrier's proposed merger with Northwest Airlines -- which itself lost $4.14 billion for the quarter, again most of which was tied to bankruptcy-related charges -- can't come soon enough for either airline, especially as oil prices climb towards $120 per barrel.

While airline officials and lawmakers continue to mull the implications of that merger, Delta CFO Ed Bastian notes the Atlanta-based carrier has already taken steps to compensate for high fuel prices... mostly through capacity cuts, and parking less-efficient (on a cost-per-available seat mile basis) regional jets.

"We have moved quickly to mitigate the short-term impact of higher fuel prices by further reducing domestic capacity," Bastian said, before adding "We clearly need to do more."

FMI: www.delta.com, www.nwa.com, www.newglobalairline.com