ATLANTA — Delta Air Lines Inc. will report another huge quarterly loss on Wednesday and plans to skip its routine of speaking to investors — a sign to some observers a bankruptcy filing is near. One analyst said in a research note that a Chapter 11 filing is highly likely soon.
Delta, which operates a hub at Salt Lake City International Airport, was mum Tuesday on its intentions, except to repeat a prior statement that it will have to seek court protection if it fails to restructure its heavy debt and win deep concessions from its pilots in the next several weeks.
Company shares fell 12 cents, or 3.9 percent, to close at $2.99 Tuesday on the New York Stock Exchange. The shares have fallen more than 90 percent since the 2001 terrorist attacks, but remain slightly above the 52-week low of $2.94 posted on Sept. 27.
In a Securities and Exchange Commission filing on Friday, Delta revealed that it expects its net loss for the third quarter to be $625 million to $675 million, or $4.99 to $5.39 a share. The loss, to be reported Wednesday before the market opens, would be significantly higher than the $3.79 a share analysts had expected.
In a statement accompanying the filing, Delta said it would not conduct a conference call with investors Wednesday to answer questions about the earnings release. It cited in part as a reason its efforts to avoid bankruptcy.
"It's highly unusual, but what are they going to say, because everyone is going to be wondering about the pilots," said Ray Neidl, an analyst with Calyon Securities Inc. in New York. "I see that as a sign that the end is near."
UBS analyst Robert Ashcroft said in a research note Tuesday that the likelihood of a Chapter 11 filing by the nation's third-largest airline has increased since the SEC filing because of how little cash it has left to repay debt. Delta says it had $1.45 billion in unrestricted cash as of Sept. 30, below the $1.5 billion threshold many analysts believe is tantamount to a bankruptcy filing.
"It would take a brave person to approach a credit committee with a proposal to loan Delta more money right now," Ashcroft said. He added that bankruptcy is "not a foregone conclusion, but highly likely" within a month or two.
Atlanta-based Delta has $20.6 billion in total debt. It has been trying to restructure the terms of some of its debt commitments to help avoid bankruptcy. A recent debt exchange offer is part of that effort.
Asked for further comment Tuesday on the reason for not holding the conference call, Delta spokeswoman Benet Wilson repeated Friday's statement. She added that meetings between the company and the pilots union remain intense, though she and a union spokeswoman would not say if the sides are near an agreement.
Delta is seeking $1 billion in concessions from its pilots, who have publicly offered up to $705 million. Delta warned recently that even with the concessions it is seeking, it still may need bankruptcy.
Meanwhile, Delta has been trying to transform itself to drive more customers onto its planes.
Its latest effort announced this week is that its low-fare subsidiary, Song, plans to sell organic baby food on all its flights to encourage parents to travel with infants and small children. Song has been targeting the leisure crowd to fill its flights from the Northeast to Florida.
Delta has used Song to experiment with different initiatives to see if they might work in the mainline airline — Song also tried to woo passengers with martini bars on flights and free tickets for being nice.
Analysts see Song as potentially worthwhile to Delta as an incubator for change. Delta said last month that it planned to add a dozen more planes to Song's 36-jet fleet next spring.
In the long run, however, some observers remain skeptical about Song's success, in turn, Delta's transformation.
"Is Song going to be the new Delta?" said Terry Trippler, an airline industry expert in Minneapolis. "It is hard to tell. It hasn't worked for anybody else, and Delta hasn't been too successful at anything else they've tried lately."
He added, "It's going to take a whole lot more than premium baby food. It's going to have to mean premium prices to turn that airline around."