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Delta Air Lines -- $6.4 Bil. Loss Of Some Sort  
User currently offlineSTLGph From United States of America, joined Oct 2004, 9237 posts, RR: 25
Posted (5 years 12 months 3 days 8 hours ago) and read 11457 times:

_ Delta Air Lines reported losses of $6.4 billion
during its first quarter, blaming exorbitant fuel prices.

http://www.cnn.com/

[Edited 2008-04-23 04:38:25]

[Edited 2008-04-23 04:50:32]


Eternal darkness we all should dread. It's hard to party when you're dead.
87 replies: All unread, showing first 25:
 
User currently offlineOzarkD9S From United States of America, joined Oct 2001, 4879 posts, RR: 22
Reply 1, posted (5 years 12 months 3 days 8 hours ago) and read 11419 times:

Billion? BILLION? Wow. Makes the results of UA and AA seem downright joyful.


Next Up: STL-TPA-BWI-PWM-BWI-STL
User currently offlineSTLGph From United States of America, joined Oct 2004, 9237 posts, RR: 25
Reply 2, posted (5 years 12 months 3 days 8 hours ago) and read 11423 times:

Anybody else fall out of their chair just a little?


http://www.usatoday.com/travel/flights/2008-04-23-delta-q1_N.htm



Eternal darkness we all should dread. It's hard to party when you're dead.
User currently offlineBeaucaire From Syria, joined Sep 2003, 5252 posts, RR: 25
Reply 3, posted (5 years 12 months 3 days 8 hours ago) and read 11412 times:

That is technically impossible - their share-cap is only 2 Billion ...

[Edited 2008-04-23 04:47:32]


Please respect animals - don't eat them...
User currently offlineBravo1six From Canada, joined Dec 2007, 396 posts, RR: 2
Reply 4, posted (5 years 12 months 3 days 8 hours ago) and read 11423 times:

Before everyone goes ballistic, the $6.4 billion includes a non-cash charge of $6.1 billion. The net loss for the first quarter excluding special items is $274 million.

User currently offlineSkymiler From United States of America, joined Aug 2007, 511 posts, RR: 0
Reply 5, posted (5 years 12 months 3 days 8 hours ago) and read 11375 times:



Quoting Bravo1six (Reply 4):
Before everyone goes ballistic, the $6.4 billion includes a non-cash charge of $6.1 billion. The net loss for the first quarter excluding special items is $274 million.

The media strikes again!
The $274M is much more in line with general expectations, and is really what counts ..



I love to fly, and it shows!
User currently offlineSTLGph From United States of America, joined Oct 2004, 9237 posts, RR: 25
Reply 6, posted (5 years 12 months 3 days 8 hours ago) and read 11338 times:



Quoting Skymiler (Reply 6):
The media strikes again!

yes, because Delta Air Lines didn't come out and say "we lost $6.4 billion this quarter."

or anything ...

like that.

http://www.usatoday.com/travel/flights/2008-04-23-delta-q1_N.htm


But, pass the sugar, please.



Eternal darkness we all should dread. It's hard to party when you're dead.
User currently offlineNuggetsyl From United States of America, joined May 2006, 211 posts, RR: 0
Reply 7, posted (5 years 12 months 3 days 8 hours ago) and read 11337 times:

what did they write off that was 6.1 billion???

User currently offlineMarSciGuy From United States of America, joined Jun 2007, 549 posts, RR: 0
Reply 8, posted (5 years 12 months 3 days 8 hours ago) and read 11294 times:

what would the 6.1 billion be related too? (after trying to get my tongue un-swallowed from seeing the CNN headline)...


"There weren't a ton of gnats there where a ton of gnats and their families as well!"
User currently offlineSTLGph From United States of America, joined Oct 2004, 9237 posts, RR: 25
Reply 9, posted (5 years 12 months 3 days 8 hours ago) and read 11296 times:



Quoting Bravo1six (Reply 4):
Before everyone goes ballistic, the $6.4 billion includes a non-cash charge of $6.1 billion. The net loss for the first quarter excluding special items is $274 million.

here, just for you i changed the subject.



Eternal darkness we all should dread. It's hard to party when you're dead.
User currently offlineJuventus From United States of America, joined Dec 2004, 2835 posts, RR: 2
Reply 10, posted (5 years 12 months 3 days 8 hours ago) and read 11293 times:

I don't think Delta lost $6 billion in one quarter, IMPOSIBLE, but I got feeling they did worst than their rivals, specially AA and UA.

User currently offlineSevenair From United Kingdom, joined Feb 2001, 1728 posts, RR: 0
Reply 11, posted (5 years 12 months 3 days 8 hours ago) and read 11293 times:



Quoting Nuggetsyl (Reply 8):
what did they write off that was 6.1 billion???

Was it not to do with NWA?


User currently offlineBravo1Six From Canada, joined Dec 2007, 396 posts, RR: 2
Reply 12, posted (5 years 12 months 3 days 8 hours ago) and read 11222 times:

According to other links, it was a non-cash write down of goodwill. I'm not an accountant, but it looks like an accounting item on the balance sheet rather than an "actual" loss.

User currently offlineMarSciGuy From United States of America, joined Jun 2007, 549 posts, RR: 0
Reply 13, posted (5 years 12 months 3 days 8 hours ago) and read 11190 times:

After reading another article they lost 69 cents a share as opposed to 49 cents predicted by the analysts, still terrible, but...


"There weren't a ton of gnats there where a ton of gnats and their families as well!"
User currently offlineB6MoneyGuyJFK From United States of America, joined Jun 2006, 230 posts, RR: 0
Reply 14, posted (5 years 12 months 3 days 8 hours ago) and read 11136 times:

A couple of lines taken from the AP article:


"Excluding special items, primarily a $6.1 billion non-cash charge relating to the decline in Delta's market value due to sustained record fuel prices, the airline lost $274 million, or 69 cents a share, in the first quarter."


Can someone explain (in good old English) what that means. Are they saying because of the high fuel prices, they aren't worth as much as they were (high fuel caused a decline of the stock value), so they are taking a one time hit? Sorry for sounding ignorant.



Opinions are like @ssholes. Everyone has one, and everyone thinks everyone elses stinks!
User currently offlineSacamojus From United States of America, joined Dec 2006, 228 posts, RR: 1
Reply 15, posted (5 years 12 months 3 days 8 hours ago) and read 11115 times:

When you have to devalue an asset, you have to make it ballance with the rest of the balance sheet. The appropriate thing to do is to write down net income. Smart move as now DL has some tax benefits coming if they return to profitablility.

User currently offlineHiflyer From United States of America, joined Nov 2004, 2153 posts, RR: 3
Reply 16, posted (5 years 12 months 3 days 8 hours ago) and read 11094 times:

Looks like DL has decided to get all 'nonfirm' stuff off the balance sheet in a hurry....stuff they used to exit chapt 11 (goodwill? hmmm) now are being written off the books quickly...DL is now worth 6b less than they claimed a day ago which means their debt to equity has just radically changed to the negative. I suspect a huge credit squeeze is in process which forced the write off.

User currently offlineJawake From United States of America, joined Sep 2007, 257 posts, RR: 0
Reply 17, posted (5 years 12 months 3 days 7 hours ago) and read 11033 times:

MSNBC just used the 6 Billion Dollar figure. My jaw hit the floor. Some one needs to help the media understand these reports.

User currently offlineSkymiler From United States of America, joined Aug 2007, 511 posts, RR: 0
Reply 18, posted (5 years 12 months 3 days 7 hours ago) and read 11034 times:



Quoting Sacamojus (Reply 15):
When you have to devalue an asset, you have to make it ballance with the rest of the balance sheet. The appropriate thing to do is to write down net income. Smart move as now DL has some tax benefits coming if they return to profitablility.

You got it!
Also, think of the banks and what they are going through. Their huge "write downs" will suddenly become "good income" when the actually calculate the value of the assets and discover they "wrote down" too much.
Please bow to the Gods of accounting, tax law and Wall Street.



I love to fly, and it shows!
User currently offlinePanamair From United States of America, joined Oct 2001, 4792 posts, RR: 25
Reply 19, posted (5 years 12 months 3 days 7 hours ago) and read 11011 times:
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Quoting Sacamojus (Reply 15):
if they return to profitablility.

Which, according to guidance, should happen in Q2 (unless they choose to write down some big item again).

Current guidance for Q2 Operating Margin is in the +3 - 5% range (with 49% of fuel hedged at $2.79/gallon cap) - expect operating profit to be in that area unless fuel goes up significantly more...

They are usually pretty good with their guidance - guidance for Q1 2008 operating margin was a negative 2-4%; they came in at about negative 3.3% in Q1 2008 ($161 million Operating Loss excluding special items on a revenue base of $4.766 billion)


User currently offlineSTLGph From United States of America, joined Oct 2004, 9237 posts, RR: 25
Reply 20, posted (5 years 12 months 3 days 7 hours ago) and read 10986 times:



Quoting Jawake (Reply 17):
MSNBC just used the 6 Billion Dollar figure. My jaw hit the floor. Some one needs to help the media understand these reports.

Well, tell Delta to not say they lost $6.4 Billion.

Contact these people...

http://news.delta.com/article_display.cfm?article_id=8934



Eternal darkness we all should dread. It's hard to party when you're dead.
User currently offlineTak From United States of America, joined Jul 2006, 161 posts, RR: 0
Reply 21, posted (5 years 12 months 3 days 7 hours ago) and read 10957 times:

Still not great news since the overall first quarter loss still exceeded wall street expectations. Let's hope for a return to profitability overall by the ned of the year!

User currently offlineBrianDromey From Ireland, joined Dec 2006, 3901 posts, RR: 9
Reply 22, posted (5 years 12 months 3 days 7 hours ago) and read 10841 times:

My accounting teacher always said "Lads, cash and money are not the same". There are all sorts of repproriaton accounts and god knows what else to account for the amount in the bank Vs the amount on the books.

Its very, very complicated and made more so by clever tax lawyers and accountants who manipulate figures so much its hard to know where the end and beginning is.

Personally I think the airlines need to reduce the number of hub cities and use the freed-up capacity to cull RJ service or increase point-to-point flying. Its much easier to make this kind of operation profitable, because you dont have flights that are not profitable in themselves but do contribute to the system overall. Just as FR, U2, EI, and all the other European airlines, the LCC carriers tend to have crew bases with several aircraft based there and the 'flag carriers' have just one hub. I think the american system is a bit complex to make real money, but maybe it is necessary due to the huge size of the country.

Brian.



Next flights: MAN-ORK-LHR(EI)-MAN(BD); MAN-LHR(BD)-ORK (EI); DUB-ZRH-LAX (LX) LAX-YYZ (AC) YYZ-YHZ-LHR(AC)-DUB(BD)
User currently offlineSTLGph From United States of America, joined Oct 2004, 9237 posts, RR: 25
Reply 23, posted (5 years 12 months 3 days 7 hours ago) and read 10819 times:



Quoting BrianDromey (Reply 22):
I think the american system is a bit complex to make real money, but maybe it is necessary due to the huge size of the country.

yeah, it's kind of a big place  Wink

point to point just doesn't work for a large number of cities to get from point a to point b.



Eternal darkness we all should dread. It's hard to party when you're dead.
User currently offlineCommavia From United States of America, joined Apr 2005, 11127 posts, RR: 62
Reply 24, posted (5 years 12 months 3 days 7 hours ago) and read 10770 times:

That $6.4 billion number is totally meaningless - it's related to an impairment of Delta's goodwill assets (I didn't even realize Delta had goodwill on their books).

The more important number is the actual net loss before special items, which is $274M.

And, really, both of those numbers don't mean much - they're largely accounting paper numbers. The really, really important number is the one we can't see quite yet - we'll have to wait until Delta files their 10Q with the SEC: the company's Q1 cash flow from operations. That is the really key one.


25 Post contains links Pellegrine : I think it's almost scandalous the way these media releases report numbers. A huge bold number that is misleading, it's tabloid-ish. In actuality the
26 777STL : Being an accountant, I'd love to know specifically what that goodwill was related to, especially something of that magnitude. In any case, an impairm
27 SparkingWave : The loss has been translated as a loss of around $16.50 per share. That a pretty big hit if you own stock in Delta. Has the bottom fallen out from Del
28 RL757PVD : Before anyone gets their panties in a bind... lets look at who else posted a massive acct loss today... NW! DL + NW = 10 Billion in write off losses..
29 Phollingsworth : Well considering the stock is down today yup you are taking a hit. However, most of the hit has already occured in the drop in market cap since DL em
30 Post contains links AirFrnt : from: http://biz.yahoo.com/ap/080423/earns_delta.html Delta and Northwest report combined $10.5B loss on fuel cost The only question is, in my mind, i
31 B6fll : Hopefully the goverment will approve there merge quick so these two airlines can get together somewhere and piss there money away together so its only
32 Mayor : Hey, I thought you liked DL and didn't bash them or am I mistaken?
33 MasseyBrown : The loss is real, but the non-cash portion will be charged against stockholders equity on the balance sheet, not profits. DL wrote off some "goodwill"
34 Clipper136 : As I understand it, and I could be off base. When DL emerged from Chap 11, The market value was based on current assets and "goodwill" ( Market value
35 Spacecadet : No, it's off expectations by around 45% (49 cents per share vs. 69 cents per share). That is a large difference. A loss is bad enough, but a loss tha
36 LipeGIG : Just playing with oil prices. Fuel expense was increased in 50%, or $ 474 million as well as contract carriers agreements by $ 179 million (i believe
37 Phollingsworth : That would be true if expectations meant anything in general. Does anyone have any data on how good or bad the "expectations" really are when compare
38 MasseyBrown : The goodwill was also force up by the need to "create" an equity value higher than the $9 billion offer US made for buying DL. So DL pumped up the eq
39 Pope : I disagree. Goodwill is created when you pay more for something than it's fair market value. In theory goodwill represents the present value of futur
40 EWRCabincrew : Why start now?
41 ChiGB1973 : Finally. M
42 0NEWAIR0 : Fall out of my chair?! No...I did not...I slumped down in it because I had a slight heartattack! BILLION! That's with a B! ...I'm speechless
43 LAXdude1023 : So in reality when compareing this to what AA, UA, and CO reported, they lost $274 million?
44 BNAtraveler : I posted this in the NW thread, but it is just as applicable to this one: Methinks this is a game. Do a huge write down (and cry poor and imply that
45 WorldTraveler : you did. DL's earnings/losses excluding special items were in line w/ other network carriers. DL's hedging position going forward is more aggressive
46 Silentbob : Nice timing now that they're working on a merger with NW. I can't imagine them doing this simply to help them get by any problems with regulators. /en
47 FriendlySkies : It never ceases to amaze me that even after the string of bankruptcies and countless threads about these "huge" losses, some people still think that e
48 RL757PVD : Yes, which is why these responses are a tad overdramatic:
49 MasseyBrown : Actually, the write-off isn't all bad if you can foresee a turn-around, and it doesn't really change their operating posture or outlook from yesterday
50 0NEWAIR0 : My heart attack response to the 6.5 billion was before I knew the real cause. You have to admit that when the news comes on in the morning and says "
51 Travelin man : I tend to agree that the extent of these losses by both NW and DL (and the timing of the announcements) seems suspiciously like a way to say to the g
52 RFields5421 : According to some news reports I've seen - the major airlines will be able to write off a very large amount of previously paid taxes and receive refu
53 Planefxr : Six more firm and 29 options, I had no idea they had so many options, WOW. By the way DL can convert any of those options and take delivery in 18 mon
54 777STL : Thanks for that refresher course, it's been a while since I've studied goodwill. That was an astute analysis.
55 Post contains links Deltal1011man : 11 options 12 rolling options. 6 on order. (what are rolling options?) http://www.delta.com/about_delta/cor...ats_facts/aircraft_fleet/index.jsp
56 Lono : Excellent post... easy to understand.... Indeed... however the shareholders took the hit big time and since they have devalued themselves financing w
57 Planefxr : I edited my previous post, as I did not realize DL had increased their options on the LR. As far as the difference in options and rolling options I b
58 Alitalia744 : " target=_blank>http://www.delta.com/about_delta/cor...x.jsp The correct info was already posted on the 77L fleet: 2 in service 6 on order 29 options
59 474218 : Delta reports 1st Quarter loss of $6.4 billion. Northwest reports a 1 Quarter loss of $4.1 billion. Merge these two and what do you get, the worlds la
60 Jawake : No kidding, when I read the CNN article I was stunned to find out that NW was just as bad as DL. whew! Not a great time for these 2 airlines. Combine
61 RDUDDJI : Wow. Now, how much money was US offering for DL just a year or two ago...? Bet the board wishes they could go back in time to that... It's sad times i
62 Planefxr : From DL's release today. Options have scheduled delivery slots. Rolling options replace options and are assigned delivery slots as options expire or a
63 Planefxr : No they don't.
64 FlyASAGuy2005 : I THINK, rolling options are aircraft that can fill in options when their delivery slots has passed or the airline decides to firm up on said options
65 Brilondon : " target=_blank>http://www.cnn.com/ Welcome to the World's most unreliable source for news.
66 BHMBAGLOCK : " target=_blank>http://www.cnn.com/ I connected through ATL this morning and felt really sorry for the CSRs. The TVs with over-amped volume are all t
67 LAXdude1023 : You better believe it. I paid $4.05 at a 76 on Olympic and Barrington in West LA. I like to fill up in Torrance or Carson because its cheaper there.
68 Pope : Thank you for the kind words. I run a privately held company in an industry with significant public company participation. For this reason I listen i
69 RobertS975 : Good will, whatever that is!
70 Hardiwv : It all indicates that even with the merger it will really difficult for the airline to become competitive and financially sustainable even with a comb
71 Justloveplanes : Delta's good will on the balance sheet as of a few days ago was 12 billion dollars. It must have been leftover from Grinsteins efforts to fight off U
72 Pope : From their last 10K The document was filed with the SEC on 2-15-08. It seems incredible to me that a company could feel that an asset was properly va
73 Airlinespotter : One word "OUCH".
74 Bravo1six : That's not what the 10K you cited says. It is referring to the valuation of goodwill done at the time that DAL emerged from Chapter 11, not a valuati
75 Flighty : This is obviously a bunch of crap to suggest "dire conditions" for both NW and DL to hasten their merger, and poison the well for existing shareholder
76 MasseyBrown : DL really had no alternative while they were in bankruptcy. The creditors wouldn't agree to any write-down of secured debt, so DL had to invent the g
77 Danny : Goodwill write offs are non cash expense, however you have to question why do they still have so much rubbish on their balance sheets (both DL and NW)
78 Brilondon : On the contrary. Airlines in Asia and Europe are owned or partially owned by the governments of the their respective countries and thus are insulated
79 Pope : No sir. Per GAAP and SEC regulations, the figures reported on the financial statements are supposed to be accurate as of the date they are provided.
80 Bravo1Six : In house counsel at a $10 billion+ (that's billion, with a B) public company in the aviation business. Shall we continue to play my balance sheet is
81 Justloveplanes : I see your point but I want to draw your attention to the latter part of your sentence. I think this was principally done to avoid the US Airways buy
82 MasseyBrown : My sentence was not a model of clarity, but I think we are in agreement.
83 Pope : First of all, I wasn't comparing mine to yours. I was only offering my credentials as one would expect that if I asked for yours, you should rightly
84 Revelation : Pope, thanks for your very clear posts. I know next to nothing about finance or accounting, but am able to follow what you are saying quite well (I th
85 Bravo1Six : Fair enough, and I didn't mean to start a rumble, thus the *wink* at the end. Given our global operations, we abide by the laws of various jurisdicti
86 WorldTraveler : surely you two both realize that there are time periods under which DL and other companies have to revisit and revise if necessary their goodwillI. I
87 Bravo1Six : The timing of the 2/15/08 filing and the time period to which it relates, i.e., the previous quarter, is part of the reason why you can't just point
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