Delta Started 2004 in the red

After triggering a war among airlines over discount fares, Delta has reported staggering losses for fourth-quarter and full-year 2004 at times when the industry continues to adjust to the new fare structure it unleashed on the market earlier this month.

Delta lost $2.2 billion in the fourth quarter alone and $5.2 billion for the year, possibly the largest lost ever posted by an airline. That´s even worse than the $3.5 billion loss posted by American in 2002.

Delta´s $5.2 billion yearly loss compares with a $773 million loss in 2003. The airline ended 2004 with $1.8 billion in cash but also with $20.4 billion in debt.

“If Delta is to survive, we must develop a fundamentally different way of doing business, and that´s what we´re doing,” CEO Gerald Grinstein said.

Delta said it achieved “critical milestones” in its transformation plan in the fourth quarter, such as a pilots union contract that includes a 32.5% pay cut and should provide $1 billion in long-term, annual cost savings. Delta also signed agreements to borrow up to $1.13 billion.

Delta executives, however, are not under any illusion of a quick turnaround. “We know the road ahead is at least as long as the distance we´ve already come,” Grinstein said.