Delta Air Lines Inc., which expects a more than $2 billion (Ђ1.7 billion) loss this year, said on Wednesday it will return to profitability two years from now if, among other things, it can wring huge concessions from its pilots and jet fuel doesn't get more costly.
The Atlanta-based airline's projection of a $498 million (Ђ415 million) annual profit in 2007, its first since 2000, was included in a Securities and Exchange Commission filing.
Delta, which filed for bankruptcy protection on Sept. 14 in New York, said its expected $2.1 billion (Ђ1.75 billion) loss for this year, which excludes one-time items, will drop to a $412 million (Ђ343.5 million) loss in 2006, followed by the projected profit in 2007.
In 2000, the airline posted an annual profit of $815 million. It has posted nearly $10 billion (Ђ8.3 billion) in losses since January 2001, and another loss is expected when it reports its third-quarter results on Nov. 9.
Delta's ability to meet its projections in its business plan depends on several factors.
One of those is its ability to cut annual labor costs by $930 million (Ђ775.5 million). Of that total, it wants $325 million (Ђ271 million) in concessions to come from its pilots. Another factor is fuel prices. Delta's business plan assumes that the average price of jet fuel will be $2.01 per gallon for the rest of the year and $1.73 a gallon in 2006 and 2007.
At the moment, the spot price of jet fuel in New York is $1.94 a gallon.
Delta said that for its business plan to be successful, and for it to reach its earnings projections, it must also survive a serious but short-term liquidity shortfall. It said it expects to do that through court-approved debtor-in-possession financing and then through decreasing costs and increasing revenues, AP reported. V.A.
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