Investing in Airlines: A Profitable Delta?
By Ian Cooper
The nation’s third biggest airline carrier is successfully setting big goals for itself. Let’s just hope achieving them and unlocking needed shareholder value is just as successful.
Delta, which plans to emerge from bankruptcy by April 30 and be re-listed in May, hopes to post $816 million in pre-tax income dollars, as compared to a 2006 pre-tax loss of $452 million as it cuts costs, slashes debt to $7.6 billion in 2007, generates about $5 billion in cash flow, improves customer service, and considers selling some assets.
While the asset sell-offs have yet to be announced, we’re hearing that subsidiary, Comair could be sold. But that’s just the word on the Street.
We’re also hearing that Delta, by this Friday, will announce the post-bankruptcy board of directors, and hopefully, a new CEO. Gerald Grinstein is leaving after Delta exits Chapter 11.
We also expect to see further buyout speculation emerge from the airline sector, with Delta operating as the acquirer per Grinstein’s quote (from BusinessWeek), “Frankly, I see its future more as an acquirer rather than be acquired.”
With any buyout speculation that’s likely to emerge, please do your due diligence before buying. We’ll keep you up to date on any airline speculation we come across.
Take care,
Ian L. Cooper, Editor, Early Alert Trader
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