Delta sees growing cash balance in 2010 despite $1.1 billion pension obligations

By Harry R. Weber, AP
Tuesday, December 15, 2009

Delta expects cash balance to grow in 2010

ATLANTA — Delta Air Lines Inc., the world’s biggest airline, expects to increase its cash balance in 2010 despite more than $1.1 billion in pension expenses and funding requirements planned for next year.

The airline said in a presentation filed with the Securities and Exchange Commission Tuesday ahead of an investor conference that it projects it will end 2010 with $5.4 billion in unrestricted liquidity, up from the $5.3 billion it expects to end this year with.

Just a week ago, Delta said it expected to end 2009 with $5.1 billion in liquidity. President Ed Bastian said the higher projection was due to improving revenue and booking trends.

Delta said capacity will be flat in 2010 compared to this year. Bastian said that if the positive revenue trends were to abate, Delta can pull back capacity.

Delta, based in Atlanta, is targeting $600 million in new cost savings and productivity enhancements next year.

Ancillary revenue, which includes bag fees and other add-on charges, has been a key source of revenue for airlines.

The positive projections about next year come after a difficult 2009 for Delta and much of the rest of the U.S. airline industry, which faced weak demand for air travel, especially among business travelers. Bastian described the environment airlines have faced as the “worst economic storm of our lifetime.”

Delta forecast a $1.5 billion net loss for 2009. Excluding special items, the net loss for this year is expected to be $1.1 billion. Delta’s fourth-quarter and fiscal year ends Dec. 31.

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