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- Aug 22, 2002
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Delta in line for biggest federal bailout check
By RUSSELL GRANTHAM
Atlanta Journal-Constitution Staff Writer
Delta Air Lines will be the biggest beneficiary of the industry''s second government bailout in less than two years, according to one analyst''s estimates. The Atlanta airline''s share of more than $2 billion in taxpayer cash to be doled out this spring will add up to $422 million, estimated Sam Buttrick, veteran airline analyst for UBS Warburg.
Delta will also benefit from another $91 million, Buttrick said in a note to investors, during a four-month security fee tax holiday starting June 1.
The cash grants are part of $3.8 billion in airline aid Congress included in its war spending bill totaling almost $80 billion, approved by the House and Senate over the weekend. President Bush is expected to sign it today.
The bill also includes executive pay limits added after reports that Delta and some other airlines awarded bonuses and other executive perks in 2002 despite huge losses, job cuts and frequent appeals for taxpayer aid.
American Airlines will be the second-largest aid recipient, said Buttrick, who based his estimates on each airline''s share of enplanements by domestic passengers.
Delta handles more passengers than any other airline, although it is considered the third-biggest carrier. American and United log more revenue passenger miles, due to more long-range routes.
The security fees, which are added to each ticket, are $2.50 for each leg of a flight, or $10 for a typical round-trip flight connecting through a hub airport.
The aid package would reimburse $100 million of airlines'' cost to reinforce cockpit doors, divvy up $2.3 billion in relief based on airlines'' past collections of security fees, extend government-funded war-risk insurance and extend unemployment benefits for airline workers.
Delta got $668 million from the first aid package in late 2001, so it will have gotten nearly $1.1 billion after the latest payments.
The second dose of cash will be timely for airlines, which are reporting wider losses for the first quarter ended March 31. Continental Airlines on Tuesday said it lost $221 million, citing the impact of the war in Iraq, high fuel prices and concerns over a deadly respiratory disease that originated in Asia.
Northwest Airlines releases first-quarter results today, followed by Delta on Thursday.
Wall Street analysts recently boosted loss estimates for several airlines. They expect Delta to report a $433 million loss before one-time charges, second only to its $486 million loss in the fourth quarter of 2001, just after the terrorist attacks.
The aid package requires most big airlines that accept aid to freeze their top two executives'' cash compensation for one year at 2002 base salary levels. That stipulation appears to require Delta''s No. 2 executive, President and Chief Operating Officer Fred Reid, to forgo any cash bonus for 2003.
A spokesman for Delta said the airline has no comment on the pay limits.
Delta Chief Executive Leo Mullin already announced he will give up a bonus and other compensation this year, following heated criticism in Congress and elsewhere over the airline''s bonus payments for 2002.
Mullin got a $795,000 salary and a $1.4 million bonus in 2002. Reid''s 2002 salary and bonus were $700,000 and $1.2 million, respectively. The airline, which lost $1.3 billion last year, also doled out six-figure bonuses to another 58 executives under a retooled formula focused more on cash flow than profit. It also spent $25.5 million funding bankruptcy-proof trust funds for top executives'' pensions.
Delta said the moves were aimed at holding its management team together.
By RUSSELL GRANTHAM
Atlanta Journal-Constitution Staff Writer
Delta Air Lines will be the biggest beneficiary of the industry''s second government bailout in less than two years, according to one analyst''s estimates. The Atlanta airline''s share of more than $2 billion in taxpayer cash to be doled out this spring will add up to $422 million, estimated Sam Buttrick, veteran airline analyst for UBS Warburg.
Delta will also benefit from another $91 million, Buttrick said in a note to investors, during a four-month security fee tax holiday starting June 1.
The cash grants are part of $3.8 billion in airline aid Congress included in its war spending bill totaling almost $80 billion, approved by the House and Senate over the weekend. President Bush is expected to sign it today.
The bill also includes executive pay limits added after reports that Delta and some other airlines awarded bonuses and other executive perks in 2002 despite huge losses, job cuts and frequent appeals for taxpayer aid.
American Airlines will be the second-largest aid recipient, said Buttrick, who based his estimates on each airline''s share of enplanements by domestic passengers.
Delta handles more passengers than any other airline, although it is considered the third-biggest carrier. American and United log more revenue passenger miles, due to more long-range routes.
The security fees, which are added to each ticket, are $2.50 for each leg of a flight, or $10 for a typical round-trip flight connecting through a hub airport.
The aid package would reimburse $100 million of airlines'' cost to reinforce cockpit doors, divvy up $2.3 billion in relief based on airlines'' past collections of security fees, extend government-funded war-risk insurance and extend unemployment benefits for airline workers.
Delta got $668 million from the first aid package in late 2001, so it will have gotten nearly $1.1 billion after the latest payments.
The second dose of cash will be timely for airlines, which are reporting wider losses for the first quarter ended March 31. Continental Airlines on Tuesday said it lost $221 million, citing the impact of the war in Iraq, high fuel prices and concerns over a deadly respiratory disease that originated in Asia.
Northwest Airlines releases first-quarter results today, followed by Delta on Thursday.
Wall Street analysts recently boosted loss estimates for several airlines. They expect Delta to report a $433 million loss before one-time charges, second only to its $486 million loss in the fourth quarter of 2001, just after the terrorist attacks.
The aid package requires most big airlines that accept aid to freeze their top two executives'' cash compensation for one year at 2002 base salary levels. That stipulation appears to require Delta''s No. 2 executive, President and Chief Operating Officer Fred Reid, to forgo any cash bonus for 2003.
A spokesman for Delta said the airline has no comment on the pay limits.
Delta Chief Executive Leo Mullin already announced he will give up a bonus and other compensation this year, following heated criticism in Congress and elsewhere over the airline''s bonus payments for 2002.
Mullin got a $795,000 salary and a $1.4 million bonus in 2002. Reid''s 2002 salary and bonus were $700,000 and $1.2 million, respectively. The airline, which lost $1.3 billion last year, also doled out six-figure bonuses to another 58 executives under a retooled formula focused more on cash flow than profit. It also spent $25.5 million funding bankruptcy-proof trust funds for top executives'' pensions.
Delta said the moves were aimed at holding its management team together.
36 PM gilbertguy wrote: 
