Delta Predicts Profits Starting Next Year; US Airways Won't Back Down

Delta yesterday predicted it can swing to a $456 million full-year profit in 2007 without any partners but US Airways executives weren't fazed by Delta's tough talk yesterday, adding that they still believe they have a better plan for Delta.

Delta yesterday, as expected, filed its lengthy plan of reorganization with the bankruptcy court, including a five-year overview of the carrier's business plan and some initial financial projections. The disclosure statement, also released yesterday, values the carrier at about $9.4 billion-$12 billion. These values would allow unsecured creditors to recover 63%-80% of their allowed claims, the airline said, subject to certain assumptions and adjustments.

Delta's strategy is designed "to generate the strong and stable operating margins with a significantly improved balance sheet necessary to enable us to weather future volatility in the airline industry," said CFO Ed Bastian. Delta predicts that passenger revenue will grow about 7% this year to $15.7 billion thanks to fare increases and the capacity shift from U.S. domestic flights to international routes.

Through 2010, Delta predicts revenue will grow an average of 6% each year thanks to higher loads and yields. By 2010, passenger revenue will reach more than $19.8 billion. Delta assumes it will "achieve unit revenue parity among network peers by 2008," the plan said. Passenger RASM is expected to increase 4% in 2007 and 2% each year from 2008 through 2010.