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Earnings report

Delta struggles; other airlines mark profits

ATLANTA - Delta's ability to stay out of bankruptcy grew even more uncertain Thursday as the nation's third-largest airline posted a $388-million second-quarter loss to push its red ink to just less than $10-billion since early 2001.

"There are some things beyond our control," chief executive Gerald Grinstein said, citing fuel and pension costs.

He said Delta will review those items in determining its course. Fitch Ratings airline analyst Bill Warlick said Delta will be forced into Chapter 11 if Congress doesn't enact meaningful pension reform by the fall.

Meanwhile, discount airline JetBlue and the parent company of regional carrier America West reported small profits Thursday, a positive sign in an industry racked by persistently high fuel prices.

Delta said it spent $1.05-billion on fuel in the quarter, 57.5 percent more than it spent in the same period a year ago.

The company's results beat Wall Street expectations, but Delta shares fell 31 cents, or 7.9 percent, to $3.60 in afternoon trading on the New York Stock Exchange.

The airline said its unrestricted cash reserves fell to $1.7-billion at the end of the second quarter, compared with the $1.8-billion it had at the end of the first quarter.

"Record-high fuel prices and other factors out of our control during the quarter outpaced our transformation initiatives and masked our progress," Grinstein said.

The company is trying to avoid a bankruptcy filing, but has conceded at various points over the past few months that it may not be able to.

On Wednesday, Delta abruptly replaced its chief financial officer and made other executive changes as it prepared to record the hefty loss. Despite the management shuffle, Grinstein said it's not a suggestion that bankruptcy is imminent.

[Last modified July 22, 2005, 00:32:15]