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Delta 2Q loss to soar
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June 15, 2001: 3:02 p.m. ET
No. 3 airline cites Comair strike, weak economy for doubling loss estimate
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NEW YORK (CNNfn) - Delta Air Lines warned Friday that it will post a much larger-than-expected loss in the second quarter due to the combination of a weak economy and the pilots strike at its feeder airline unit, Comair Inc.
In a filing with the Securities and Exchange Commission, the carrier said it expects a loss of $140 million to $160 million, or $1.15 to $1.30 a share. Analysts surveyed by earnings tracker First Call had forecast the nation's No. 3 airline to lose 58 cents a share, compared with a profit of $2.85 a share a year earlier.
Shares of Delta (DAL: up $0.04 to $42.80, Research, Estimates) were only off slightly Friday following the filing, though, suggesting that not many investors were believing the forecasts before the report. The range of forecasts runs from break even to a low of a loss of $1.43 a share, and the two who have the break-even forecast have not changed their estimates since before Delta released weak traffic numbers for May.
Airline analysts have been repeatedly lowering forecasts across the industry due to a drop in demand, particularly from the business traveler who pays top dollar. Mike Linenberg, airline analyst for Merrill Lynch, issued a report to clients this week that the industry as a whole would lose $595 million for the year, rather than his previous forecast of a $570 million industry profit. Excluding results from discount carrier Southwest Airlines (LUV: unchanged at $17.19, Research, Estimates), the most profitable airline, his industry-wide loss for the year climbs to $1.2 billion.
Beyond the industry-wide problems, Delta has been plagued with a strike at its Comair unit, which handled about half the flights under the Delta Connection name. The strike severely disrupted operations at Delta's No. 2 hub in Cincinnati, as about half the 25,000 daily passengers who were flying Comair before the strike were connecting from or to Delta flights.
Comair and the Air Line Pilots Association reached a tentative agreement late Thursday afternoon that could end the strike, now in its 82nd day, although rank and file ratification still is needed before flights can resume, and the airline has yet to give a time frame for when flights could resume if there is approval.
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Delta's filing said the Comair strike, which started March 26, has cost $1.5 million to $2.0 million a day.
It also pointed out that it has faced customer uncertainty as pilots at the main airline negotiated and agreed to a tentative agreement there. The tentative agreement was reached with the Delta pilots on April 22, a week before a strike could have started, and that deal still faces contract ratification as well. 
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Pilots, Delta unit Comair reach deal - Jun. 14, 2001
Forecasts for airline profits lose altitude - June 5, 2001
Airlines, travelers hit by labor pains - May 25, 2001
Comair vote hits Delta 2Q forecasts - May 14, 2001
Comair pilots to vote on settlement - May 4, 2001
Pilots' leaders OK pact with Delta - May 3, 2001
Delta pilots questions threaten pact - May 2, 2001
Delta's pilots deal avoids strike - Apr. 23, 2001
Airline losses fly over 1Q forecasts - Apr. 18, 2001
Comair to slash jobs - Apr. 16, 2001
No end in sight for Delta feeder strike - Mar. 27, 2001
Delta feeder airline struck by pilots - Mar. 26, 2001
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