Hit hard by costs associated with its Chapter 11 reorganization, Delta Air Lines yesterday reported a second-quarter net loss of $2.2 billion, widened from a deficit of $382 million in the year-ago period.The airline said it earned $175 million in net income for the quarter excluding restructuring items, reversing a net loss of $304 million excluding special items in the year-ago quarter. "Delta's second quarter results continue to reflect both the solid progress we are making in our restructuring and the substantial challenges we are facing from high fuel prices," CFO Edward Bastian said. "We are aggressively restructuring our business."

Operating revenues rose 9.6% to $4.7 billion while expenses fell 2.1% to $4.3 billion, net of a 5.4% fuel cost increase to $1.1 billion, reflecting a 30% rise in cost per gallon offset by an 18.7% reduction in consumption. Operating income was $369 million, nearly a $500 million positive swing from an operating loss of $129 million a year ago. Yield grew 15% to 14.07 cents as RPMs declined 5.1% to 30.1 billion. With capacity down 6.8% to 37.7 billion ASMs, load factor rose 1.4 points to 79.68%, pushing RASM up 17.5% to 12.34 cents while CASM excluding fuel fell 5.5% to 8.42 cents.

CEO Gerald Grinstein said Delta remains "on track" to exit bankruptcy in the first half of 2007. He said termination of its pilots pension plan (ATWOnline, Aug. 7) will be critical to the reorganization effort, although second-quarter earnings were weighed down heavily by a $2.1 billion charge related to the reopening of the pilots' collective bargaining agreement.

The airline also reiterated its commitment to restructuring its route network to reduce domestic capacity and expand international operations, although yesterday it announced the launch of a daily Atlantic City-Orlando service from Nov. 15. Delta's international capacity increased 21.5% in the second quarter compared to the previous year. As of June 30, it was operating 65 fewer mainline aircraft compared to last year.