B6MoneyGuyJFK From United States of America, joined Jun 2006, 226 posts, RR: 0 Reply 14, posted (5 years 4 weeks 15 hours ago) and read 10004 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!
Sacamojus From United States of America, joined Dec 2006, 228 posts, RR: 1 Reply 15, posted (5 years 4 weeks 15 hours ago) and read 9983 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.
Hiflyer From United States of America, joined Nov 2004, 2118 posts, RR: 4 Reply 16, posted (5 years 4 weeks 15 hours ago) and read 9962 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.
Skymiler From United States of America, joined Aug 2007, 469 posts, RR: 0 Reply 18, posted (5 years 4 weeks 15 hours ago) and read 9902 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.
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)
BrianDromey From Ireland, joined Dec 2006, 3806 posts, RR: 10 Reply 22, posted (5 years 4 weeks 15 hours ago) and read 9709 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.
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)
Commavia From United States of America, joined Apr 2005, 10188 posts, RR: 62 Reply 24, posted (5 years 4 weeks 15 hours ago) and read 9638 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 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 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