Houston Democrats

The financial information below comes from the Morningstar website.

Delta: Delta airlines hasn’t turned a profit in 5 years. Their most recent annual earnings were a net loss of $41.07/share. Their total expenses were 122% of revenues. Although their revenues grew 12% last year, other expenses increased twice that rate. In short, their backs are against the respective wall with little room to maneuver. They are also heavily indebted, with 12 billion in long-term debt.

Northwest: Their most recent annual earnings per share was a loss of $10.32/share. They did turn a profit last year when they effectively contained costs, but their annual expenses shot up in the most recent year. Their revenues are increasing. However, their cost structure is still very high and they have 8 billion in long-term debt.

United Airtines: United has not turned a profit in 4 years. Although their annual loss decreased last year, it still resulted in a per share loss of $15.25/share. Their revenue increased 19% in their last year and their expenses were 105% of revenue. Although they have a bit more maneuvering room than Delta, they are still in tough financial situation.

American: Their finances are very similar to United’s. Their expenses are about 110% of revenues, their growth rate for the latest fiscal year was 6.9%, and their latest per share earnings were a lose of $4.74. Their revenue per share position has gotten progressively better for the last 4 years, indicating their have a better handle on their internal finances. American has 13 billion in long-term debt.

Of all the airlines, I would place bets on Delta going under. First, it’s been rumored for some time, so I’m not going too far out on a limb here. However, management has a poor handle on expenses. And their debt level combined with lack of majov revenue growth adds up to a big headache.