Atlanta – Beleaguered Delta Air Lines got a lift Wednesday as the company’s latest financial report showed the best bottom line since it entered bankruptcy proceedings.
That came just hours after Delta’s pilots union announced that members voted in favor of a new contract that extends pay cuts and is expected to save the airline about $280 million a year.
Delta’s bankruptcy judge quickly approved the pilot contract, clearing the way for the three-year deal to take effect today.
Delta executives say the deal is a crucial part of their effort to recover from five years of losses totaling $14 billion.
The airline’s monthly financial report for April added a rare dash of black ink to that picture.
Delta said it had a net loss of $27 million for the month, far less than in any of the six prior monthly reports since it went into Chapter 11. Moreover, the airline said its so-called operating result – a reflection of basic daily operations that excludes restructuring costs and other expenses – was a profit of $84 million.
Delta had not reported any profit in a monthly or quarterly financial report since early 2003, when it benefited from federal aid related to the war in Iraq.
“April’s results are an encouraging indicator that our plan is working,” said Delta’s financial chief, Ed Bastian.
Despite the relatively positive news, some industry-watchers cautioned that Delta still faces big challenges. They include resolving billions in pension-plan liabilities and developing a viable plan to emerge from bankruptcy. Some also said Delta’s cash reserves could come under pressure as the summer travel season wanes.
Delta chief executive Gerald Grinstein and other top executives told the pilots in a memo that the carrier is “making real and measurable progress” on closing revenue and productivity gaps with rivals, and on improving customer service.
Grinstein said management hopes to bring Delta out of Chapter 11 protection in the first half of 2007.
The airline’s plan hinges on cutting costs or boosting revenue by a combined total of $3 billion annually. The airline said it hit more than $1 billion of the $3 billion target in April.
