State of the Airlines

Thursday, January 20, 2005

NEWS: How Bad is Delta Airlines Loss

Nobody expected Delta Airlines to make money this year or the 4th quarter for that matter but the magnitude of the loss left even the experts a bit surprised. I mean really, $2.2 billion! It left me does an airline rack up this kind of loss? Come to find out it takes a real understanding of balance sheets to truly understand this but Bill Mann over the the Motely Fool (link) does a really nice job of bringing it down to my level. Turns out you can back around $1.4 billion out of that loss for what can be called non-cash expenses. I won't even try to explain. Suffice to say that the cash type losses are in the neighborhood of $780 million. Still not chump change. Anyway, Delta's 4th quarter results underscore the fact the airline is still walking that thin line between struggling business and bankruptcy. But they are walking the line boldly trying to slash costs and reform the way they do business. It remains to be seen if bankruptcy will become a neccesity.