More troubles for DAL
Jul 13, 2004, 11:52 am
#1
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More troubles for DAL
Delta Air to Take a Big Charge
By Eric Gillin
TheStreet.com Staff Reporter
7/13/2004 12:22 PM EDT
Click here for more stories by Eric Gillin
Updated from 8:21 a.m. EDT
Less than a week before it reports second-quarter earnings, Delta Air Lines (DAL:NYSE - news - research) shares fell 6.1% Tuesday after the company said it will take a $1.65 billion non-cash for the reporting period.
The beleaguered carrier, which needs to wheedle wage concessions from pilots in order to stave off a bankruptcy protection filing, said the bulk of the charges, $1.53 billion, is related to deferred income taxes. Essentially, the company has stopped recognizing income tax benefits going forward, with Delta saying it does not know when it will be able to generate sufficient taxable income to use its deferred income tax assets.
As Delta struggles, employees are leaving the company. The remaining $117 million in charges covers a settlement related to the company's defined benefit pension plan for pilots because of higher-than-average retirements. The company, which releases earnings this coming Monday, stressed that the charges will not affect its June 30, 2004, cash position.
In reaction, shares of the carrier fell 41 cents to $6.34.
The situation at Delta is growing so dire that Citigroup Smith Barney analyst Daniel McKenzie cut his price target on the carrier to $1 on Monday night, citing the government's decision to deny United Airlines, unit of UAL (UALAQ.OB:OTC:BB - news - research), a loan guarantee.
"We think the risk of Delta filing for Chapter 11 have substantially increased, particularly with fuel continuing to hover near peak levels," wrote McKenzie, in a research note. "Despite encouraging news from the Delta pilots union on concessions, we think labor uncertainty increases for Delta following the UAL loan guarantee denial." (Citigroup Smith Barney does and seeks to do business with the companies covered in its research reports.)
Link: http://www.thestreet.com/_tsclsii/ma.../10170579.html
By Eric Gillin
TheStreet.com Staff Reporter
7/13/2004 12:22 PM EDT
Click here for more stories by Eric Gillin
Updated from 8:21 a.m. EDT
Less than a week before it reports second-quarter earnings, Delta Air Lines (DAL:NYSE - news - research) shares fell 6.1% Tuesday after the company said it will take a $1.65 billion non-cash for the reporting period.
The beleaguered carrier, which needs to wheedle wage concessions from pilots in order to stave off a bankruptcy protection filing, said the bulk of the charges, $1.53 billion, is related to deferred income taxes. Essentially, the company has stopped recognizing income tax benefits going forward, with Delta saying it does not know when it will be able to generate sufficient taxable income to use its deferred income tax assets.
As Delta struggles, employees are leaving the company. The remaining $117 million in charges covers a settlement related to the company's defined benefit pension plan for pilots because of higher-than-average retirements. The company, which releases earnings this coming Monday, stressed that the charges will not affect its June 30, 2004, cash position.
In reaction, shares of the carrier fell 41 cents to $6.34.
The situation at Delta is growing so dire that Citigroup Smith Barney analyst Daniel McKenzie cut his price target on the carrier to $1 on Monday night, citing the government's decision to deny United Airlines, unit of UAL (UALAQ.OB:OTC:BB - news - research), a loan guarantee.
"We think the risk of Delta filing for Chapter 11 have substantially increased, particularly with fuel continuing to hover near peak levels," wrote McKenzie, in a research note. "Despite encouraging news from the Delta pilots union on concessions, we think labor uncertainty increases for Delta following the UAL loan guarantee denial." (Citigroup Smith Barney does and seeks to do business with the companies covered in its research reports.)
Link: http://www.thestreet.com/_tsclsii/ma.../10170579.html
Jul 13, 2004, 12:03 pm
#2
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A better topic title would be More Trouble for DAL Shareholders. Delta has a cash problem in the future. Companies go out of business because they run out of cash, not because they lose money.
Jul 13, 2004, 12:10 pm
#3
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Despite the scary headline, Delta's write-off of its deferred income tax asset is a non-cash accounting issue. For me, the bigger news today was a fall airfare war started by the smaller airlines. (http://biz.yahoo.com/rf/040713/airlines_2.html)
Jul 13, 2004, 12:12 pm
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Brace for the onslaught of posts asking 'what will happen to my miles if DL files bankruptcy?' 
Jul 13, 2004, 12:14 pm
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What will happen to my miles if DL files bankruptcy?
Jul 13, 2004, 12:24 pm
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But, what will happen to my miles if DL files bankruptcy?
Jul 13, 2004, 12:30 pm
#7
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I've already started using my AMEX, instead of my DL AMEX, so my points stay flexible. I've cashed in enough miles for 2 RT business class seats for an upcoming trip to Spain.
I've got another 24,000 miles in my account, which I am concerned about. I worked too darn hard charging everything I buy to my mileage-bearing cards to let 24,000 miles go to waste. I might transfer some AMEX miles and take a solo trip... but I'm not yet ready to travel (alas)
Rita
I've got another 24,000 miles in my account, which I am concerned about. I worked too darn hard charging everything I buy to my mileage-bearing cards to let 24,000 miles go to waste. I might transfer some AMEX miles and take a solo trip... but I'm not yet ready to travel (alas)
Rita
Jul 13, 2004, 12:30 pm
#8
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Originally Posted by indufan
But, what will happen to my miles if DL files bankruptcy?
Jul 13, 2004, 12:35 pm
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Originally Posted by DLfan
Waiting anxiously for the third stooge. Anyone? Anyone??
Jul 13, 2004, 1:06 pm
#10
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I have a question. What happens to my Sky Miles if DL files for bankruptcy? 
Jul 13, 2004, 2:02 pm
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Originally Posted by indufan
Where are ya, Cholula? FT says you are online.
Having said that,
WHAT 'O WHAT IS GOING TO HAPPEN TO MY DL MILES??
Since I was late on this thread and NOLA Flyer beat me out as the third stooge, I guess I'll settle for fourth.
Jul 13, 2004, 2:10 pm
#12
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Your miles are all unimportant. It's all about what's going to happen to MY miles... 
Jul 13, 2004, 2:25 pm
#13
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Aaah, where goeth my miles?
I may have to do an unexpected hop around the world......or two....
I may have to do an unexpected hop around the world......or two....
Jul 13, 2004, 2:29 pm
#14
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Originally Posted by Cholula
Since I was late on this thread and NOLA Flyer beat me out as the third stooge, I guess I'll settle for fourth.
A day late and a dollar short, the story of your life.
Jul 13, 2004, 2:34 pm
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Does anyone think they are having this much fun at the headquarters of Delta Air Lines lately?
Jul 13, 2004, 2:36 pm
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Do you think the employee defectors have had to sign a "No participation in Flyer Talk" contract?
Jul 13, 2004, 2:57 pm
#17
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Is this the third consecutive post that is asking a question?
Jul 13, 2004, 3:10 pm
#18
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Originally Posted by Canarsie
Is this the third consecutive post that is asking a question?
Jul 13, 2004, 3:10 pm
#19
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I'm not sure if anyone has considered this yet, but I'm sitting on a considerable stash of Delta SkyMiles. Any idea what the impact of this will be to my SkyMiles?
(Actually, I'm anxious to see how many people we can get posting the same question in this thread before the moderators step in )
(Actually, I'm anxious to see how many people we can get posting the same question in this thread before the moderators step in
)
Jul 13, 2004, 3:13 pm
#20
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Originally Posted by NOLA Flyer
I have a question. What happens to my Sky Miles if DL files for bankruptcy?
Jul 13, 2004, 3:15 pm
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Originally Posted by jimrpa
(Actually, I'm anxious to see how many people we can get posting the same question in this thread before the moderators step in )
)
Jul 13, 2004, 3:21 pm
#22
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Why does it always have to be about the moderators?
Jul 13, 2004, 5:14 pm
#23
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Where's the Love??
rkt10 is right. Why does it always have to be about the moderators? Let's all agree, it should be about ME. As in, why don't I get the upgrade I want, why don't I get to board first, and deplane first, why can't my bag come off the carosuel first, but most importantly, what's gonna' happen to MY skymiles????
Jul 13, 2004, 5:21 pm
#24
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Originally Posted by DLfan
Brace for the onslaught of posts asking 'what will happen to my miles if DL files bankruptcy?'
Jul 13, 2004, 5:25 pm
#25
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Originally Posted by Canarsie
Does anyone think they are having this much fun at the headquarters of Delta Air Lines lately?
Jul 13, 2004, 5:40 pm
#26
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Originally Posted by deltablues
rkt10 is right. Why does it always have to be about the moderators? Let's all agree, it should be about ME. As in, why don't I get the upgrade I want, why don't I get to board first, and deplane first, why can't my bag come off the carosuel first, but most importantly, what's gonna' happen to MY skymiles????
Jul 13, 2004, 7:39 pm
#27
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I'm not a hoarder (is that a word?) so I only have about 280k miles. Does anyone know what will happen to them if DL goes bankrupt?
Jul 13, 2004, 7:48 pm
#28
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Originally Posted by Traveller
I'm not a hoarder (is that a word?) so I only have about 280k miles.
Originally Posted by Traveller
Does anyone know what will happen to them if DL goes bankrupt?
Jul 13, 2004, 7:51 pm
#29
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Originally Posted by indufan
Technically anything that is over a quarter million is a hoarder. Plus, you just redeemed over 100,000.
And who made that rule? You or DL?
Jul 13, 2004, 7:59 pm
#30
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I dont even have any DL miles but if I were to hypothetically have some what would happen?? Enquiring minds need to know!!
Jul 13, 2004, 7:59 pm
#31
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This is all great but I need to ask a VERY important question.
WHAT WILL HAPPEN TO MY SKY MILES IF DL DECLARES BANCRUPTCY?????
WHAT WILL HAPPEN TO MY SKY MILES IF DL DECLARES BANCRUPTCY?????
Jul 13, 2004, 8:03 pm
#32
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Originally Posted by Traveller
Nope, just 25k.
Originally Posted by Traveller
And who made that rule? You or DL?
http://www.flyertalk.com/forum/showthread.php?t=332865
Jul 13, 2004, 9:32 pm
#33
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Can't anyone get serious around here...
If you BAL's and RAH RAH's are done fooling around...Can someone please tell me...If Delta files for BK what will happen to all of Cholula's skymiles?
Jul 13, 2004, 9:47 pm
#34
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Originally Posted by findmeinfirst
If you BAL's and RAH RAH's are done fooling around...Can someone please tell me...If Delta files for BK what will happen to all of Cholula's skymiles?
It does not matter to me what Rssrsvp told me about you in New York, findmeinfirst — to me, you are still merely an apparition until I finally get to meet you. Rssrsvp told me, as we were standing in the middle of East 18 Street outside of the restaurant, that he met you and that he liked you as a person. However, you left before I arrived.
I am so insulted that I really don’t care what will happen to Dovster’s miles if DL files bankruptcy...
Jul 13, 2004, 10:37 pm
#35
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Originally Posted by findmeinfirst
If you BAL's and RAH RAH's are done fooling around...Can someone please tell me...If Delta files for BK what will happen to all of Cholula's skymiles?
Yeah, findmeinfirst!! Let's cut to the chase in this thread and get to the REAL problem!
We're dealing with SERIOUS miles in my case and what am I supposed to do when they go down the tubes along with Delta??!
Huh??
Jul 13, 2004, 10:45 pm
#36
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Originally Posted by Canarsie
You forgot about the Drama Queens.
It does not matter to me what Rssrsvp told me about you in New York, findmeinfirst — to me, you are still merely an apparition until I finally get to meet you. Rssrsvp told me, as we were standing in the middle of East 18 Street outside of the restaurant, that he met you and that he liked you as a person. However, you left before I arrived.
I am so insulted that I really don’t care what will happen to Dovster’s miles if DL files bankruptcy...
It does not matter to me what Rssrsvp told me about you in New York, findmeinfirst — to me, you are still merely an apparition until I finally get to meet you. Rssrsvp told me, as we were standing in the middle of East 18 Street outside of the restaurant, that he met you and that he liked you as a person. However, you left before I arrived.
I am so insulted that I really don’t care what will happen to Dovster’s miles if DL files bankruptcy...
I have been busy tonight both with customers in Nashville and PM'ing indufan back and forth trying to set up a private LAS gig between the two of us. We'd make it public but we're both concerned Dovster would catch wind of it and start his pathetic begging for a B/E ticket to join us.
So it must remain private for now. And I must ask whoever reads this post to help us keep this somewhat private. Thanks!
But, having said that, my real reason for this post was to belatedly congratulate Canarsie on HIS 5,000th post!
Jul 13, 2004, 10:47 pm
#37
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Originally Posted by Cholula
We're dealing with SERIOUS miles in my case...
Jul 13, 2004, 10:50 pm
#38
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Congratulations, Canarsie. Did you get #3,000,000 too? Who did get that anyway? Anyone we know?
Jul 13, 2004, 10:55 pm
#39
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Originally Posted by indufan
Hey, what makes your miles more serious than my miles?
!!
Jul 13, 2004, 11:01 pm
#40
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Originally Posted by Cholula
You can add the numbers any way you want but 2 million miles with no home is serious to ME...!!
!!