Delta Posts Big Loss, Nears Showdown With Its Pilots

Delta Air Lines and its pilots union appear headed for a showdown over wage concessions after the nation’s third-largest carrier on Wednesday reported another big quarterly loss, warned of mounting debt and said radical changes might be needed to turn things around.

The Atlanta-based company has not been able to reach a deal with pilots to cut their pay during on-again, off-again talks over the last year, and both sides remained steadfast in their positions Wednesday as Delta posted a $387-million first-quarter loss.

The situation puts Delta on a dangerous course. At its current rate of burning cash -- about $500 million in the January-March period -- the airline has enough cash to last only until summer 2005.

Delta has $20.6 billion in debt and a falling credit rating, making it more expensive to borrow.

Airline industry analyst Ray Neidl of Blaylock & Partners said Delta was in no immediate threat of bankruptcy. But there may be no alternative if the airline doesn’t get an agreement on deep pilot wage cuts in nine to 12 months, he said.

Delta Chief Executive Gerald Grinstein told analysts during a conference call Wednesday that “continued losses of this magnitude are unsustainable.”

Grinstein said “dramatic and radical changes” might be needed to return the airline to profitability.

The company is seeking a 30% pay cut from pilots. The pilots union has said it would accept a 9% cut and agree to forgo a 4.5% raise scheduled for May.

Delta’s first-quarter loss is equivalent to $3.12 a share for the three months ending March 31. That compares with a loss of $3.81 a share, or $470 million, in the same period last year.

Shares of Delta were unchanged at $7.70 on the New York Stock Exchange.