Delta’s Struggle Far From Over

Delta Air Lines Inc.’s transformation plan, which includes cutting annual costs by $5 billion by the end of 2006, is not enough to save the carrier, its chief executive said in a memo to employees.

CEO Gerald Grinstein said in Tuesday’s memo, obtained Wednesday by Associated Press, that the nation’s third-largest airline was still working to avoid a Chapter 11 Bankruptcy Court filing, but he reiterated that there were risks affecting Delta’s ability to do that.

“In light of what we have accomplished together so far, there can be no doubt that Delta’s transformation plan is delivering results,” Grinstein said. “What is also clear is that is not enough.”

Grinstein, citing the effect of high fuel prices and the interest expense on the company’s massive debt, said Delta planned to expand its initiatives to cut costs, improve efficiencies and raise cash.

“Given our financial situation, there is renewed speculation about bankruptcy,” Grinstein told employees.

Shares of Delta fell 40 cents Wednesday to $2.99.

Last week, Atlanta-based Delta reported a $388-million second-quarter loss.