Delta posts small loss for fourth quarter

ATLANTA -- Delta Air Lines Inc.'s corporate travel demand is picking up, its trans-Atlantic business has rebounded and it is holding its own in Asia as it closes the books on a turbulent 2009.

The world's biggest airline on Tuesday posted a $25 million loss for the final three months of the year. That's an improvement from the $1.4 billion loss it posted a year earlier.

Delta hopes for a boost in 2010 from the economic recovery, as it looks to expand its presence in New York and Asia. Delta expects a government decision by early February on a deal between it and US Airways to swap some takeoff and landing slots involving New York's LaGuardia Airport. Delta also wants to bring Japan Airlines into its SkyTeam alliance. Delta wouldn't say when it expects to hear if JAL plans to dump its alliance with American Airlines and join SkyTeam.

Weak demand for air travel made for a challenging 2009 in the airline industry. Delta and others cut flights and unprofitable routes, but still struggled as fewer business travelers took to the skies. They're also faced with higher fuel costs and a tepid economic rebound in most parts of the world. Delta hedged 40 percent of its fuel consumption for the fourth quarter, for an average fuel price of $2.17 per gallon. Aircraft fuel and related taxes in the fourth quarter fell 26 percent year-over-year. But fuel prices have trended upward over the last six to nine months. Delta expects its average fuel cost to rise to $2.22 a gallon this quarter.

Airlines have lately seen signs of a recovery in traffic and improving trends in business travel. CEO Richard Anderson said Delta expects revenue per available seat mile -- a key airline performance measure -- to improve each month of this year.

Corporate contract bookings in January are up 10 percent compared to the same month last year. The failed terror attack in Detroit aboard a Northwest Airlines jet on Christmas Day has not affected bookings, Anderson said. Delta owns Northwest and now has the right to run both carriers as one. The Northwest name will be phased out in coming months.

Don't expect the positive momentum to mean customers will get a reprieve from checked bag fees. Anderson said Delta will "stay the course" on tapping ancillary revenue, which includes bag fees.

The fourth-quarter loss Delta reported Tuesday was equivalent to 3 cents a share. In the year-ago quarter, Delta lost $2.11 a share. Revenue rose 1 percent to $6.8 billion from $6.7 billion.

Excluding special items, Delta lost 27 cents per share. Analysts surveyed by Thomson Reuters expected a loss of 24 cents a share on revenue of $6.86 billion.

Delta, based in Atlanta, said system capacity will be down 3 percent to 5 percent in the first quarter of this year. A spokeswoman said that prediction is based on reductions already made. Delta previously said that capacity, as measured by available seats times miles flown, is expected to be flat for the full year, compared to 2009.

For all of 2009, Delta lost $1.2 billion, or $1.50 a share, compared to a loss of $8.9 billion, or $19.08 a share, for all of 2008. Twelve-month revenue totaled $28.1 billion, compared to $22.7 billion for 2008.

The major airlines have added special charges to make up for some revenue lost to weak demand. Delta recently raised its fees to check a first bag on a domestic flight by $8 and by $7 for a second bag. That first bag now costs a passenger $23 and the second one $32. There is an additional charge for not checking bags at the airport instead of online.

Elite frequent fliers, first class fliers and certain other customers, including active military personnel on deployment don't have to pay the fees.

Delta said Monday it will invest $1 billion over the next three-and-a-half years to improve customer service, remodel existing aircraft and improve fuel efficiency instead of buying new planes like some of its competitors.

Delta and its SkyTeam partners have offered to give Japan Airlines $1 billion to leave American's oneworld alliance for SkyTeam. American and its partners have offered $1.4 billion for Japan Airlines to stay. Delta is banking on its global network as a greater lure than the money, and executives suggested Tuesday the Japanese carrier might not accept an upfront cash infusion from whichever U.S. partner it chooses. Japan Airlines recently filed for bankruptcy protection and plans a major restructuring.

Delta ended 2009 with $5.4 billion in unrestricted liquidity, a $400 million increase year-over-year. Delta expects the total to increase to $5.6 billion by the end of the first quarter of this year.

Anderson said Delta will continue to streamline overhead in 2010. But that doesn't mean more job cuts as a result. The CEO said much of the increased productivity the airline is seeking can come through attrition and cutting non-employee related expenses.

Delta shares fell 28 cents, or 2.1 percent, to $13.05 in morning trading.