- The Washington Times - Thursday, March 10, 2005

ATLANTA (AP) — Delta Air Lines Inc. said yesterday that it expects to report a “substantial” loss this year and could seek bankruptcy protection if conditions worsen, news that sent the stock down 11.5 percent.

In its annual report, the nation’s third-largest airline said it doesn’t expect to have enough cash coming in to cover leases, debt payments and other obligations. It could be forced to tap available cash and the final $250 million that it borrowed late last year from American Express Co.

The loan, along with $1 billion in wage cuts and other concessions by pilots, helped the Atlanta-based company avoid bankruptcy late last year. But it has remained under pressure in recent months as it is paying more for fuel while cutting ticket prices to compete with low-fare carriers.

Delta — which reported a loss of $5.2 billion for 2004, the highest by a U.S. airline in a single year — didn’t specify how much it expects to fall short in 2005, saying only, “We believe that we will record a substantial net loss.”

But the company warned in the filing to the Securities and Exchange Commission that if its situation doesn’t improve, it will have to seek Chapter 11 bankruptcy protection.

The company is trying to eliminate more than $5 billion in costs by the end of 2006. Delta said last September that it would cut up to 7,000 jobs over 18 months on top of 16,000 jobs axed since 2001.

The filing came a day after Delta announced that it was dropping its food-for-sale program, boosting prices on alcoholic beverages and eliminating pillows on many flights. A spokesman said that although the changes will lower costs, the main goal was improving customer service.

The food-for-sale program, which offered meals costing up to $10 with items from Mediterranean chicken to New York cheesecake, will be replaced April 3 by a wider assortment of free snacks in coach class on most domestic and some Latin American and Caribbean flights.

Delta stock sank by 56 cents, or 11.5 percent, to $4.33 yesterday on the New York Stock Exchange.

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