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Northwest, Delta report billions in first-quarter losses

By Katherine Yung

Detroit Free Press

(MCT)

DETROIT _ Northwest Airlines and Delta Air Lines showed Wednesday morning why they’re so eager to team up, as both carriers reported losses for the first quarter caused by record jet fuel prices.

Northwest said it lost $4.1 billion or $15.78 a share in the January to March period, compared with a $292 million loss in the year-ago period.

The results included a onetime, noncash goodwill impairment charge for accounting purposes. Excluding this charge, the airline lost $191 million or 78 cents a share.

Delta also took a similar charge totaling $6.1 billion. That caused it to lose $6.4 billion or $16.15 a share compared with a $130-million loss in the first quarter of 2007. Excluding this charge and other special items, Delta lost $274 million or 69 cents a share compared with a $6 million loss in the year-earlier period.

The results continued a string of losses in the first quarter for each of the country’s major airlines except for Southwest Airlines. And the worst isn’t over as oil prices continue to hit new highs.

“High fuel prices continue to be a challenge for Northwest and the industry,” David Davis, Northwest’s executive vice president and chief financial officer, told analysts Wednesday morning.

Northwest and Delta announced plans to merge on April 14, with Delta as the surviving carrier. On Wednesday morning, Delta told analysts it expects the cost savings and revenue opportunities from the deal to be greater than the $1 billion to $1.2 billion originally estimated.

“We haven’t plumbed the depths of the cost synergies we can wring out of the combined airline,” said Richard Anderson, Delta’s chief executive.

If the U.S. Department of Justice and other government authorities approve the merger, it is expected to be completed at year’s end.

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© 2008, Detroit Free Press.

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Distributed by McClatchy-Tribune Information Services.

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