Delta Air boosts cash, cuts costs
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Atlanta-based Delta Air Lines, the world’s largest carrier, has signed a credit card agreement that boosts its cash by US$1.05 billion, according to a Bloomberg report. It also announced that it had cut US$100 million from the cost of merging operations with newly acquired Northwest Airlines, the report added.
As a result of the moves, Delta will be “solidly profitable” in 2009, according to the airline’s President, Ed Bastian, despite the predicted impact of the global economic crisis on the aviation industry. Bastian made the comments at an investor conference in New York without specifying a figure.
Analysts reportedly believe that Delta may well achieve profit in 2009, following their link with Northwest. “What they say they can do for next year is achievable, even in a very weak economic environment,” Ray Neidl, a Calyon Securities analyst in New York, told Bloomberg in an interview. “They’ve got more opportunities with the merger to knock out weaker operations.”
The credit card agreement came from American Express’ advance purchase of frequent-flier miles. AMEX will run co-branded credit cards for the combined carrier and provide US$1 billion more in added revenue through 2010, according to Delta. The five-year extension of Delta’s current contract with AMEX will have a total value of US$15 billion by the time it expires in 2015, Bloomberg added.
“That’s cash revenue for Delta,” Bastian said.
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