ATLANTA - A Delta Air Lines Inc. executive said yesterday that the nation's No. 3 carrier is freezing hiring in certain areas as part of a cost-cutting move aimed at dealing with high fuel prices that will weaken the company's fourth-quarter results.
Delta shares (DAL: NYSE) fell nearly 5 percent to close at $18.61 yesterday. Shares of several other major carriers also fell.
President and Chief Financial Officer Ed Bastian said at the Calyon Securities U.S. Airline Conference in New York that high fuel costs will "dampen" Delta's operating margin -- the ratio of operating income to sales revenue, expressed as a percentage -- in the quarter ending Dec. 31.
He said Delta's current projection for operating margin is flat to minus 2 percent. Previously, the company projected an operating margin of 3 percent to 5 percent for the quarter. For all of 2007, Bastian said Delta is still projecting an operating margin of around 6 percent.
The company did not provide any updated profit, sales or earnings per share projections for the fourth quarter. Cost cuts will be key to helping Delta deal with higher fuel prices, Bastian said, noting that jet fuel prices are up nearly 50 percent since the beginning of 2007. He suggested there could be job cuts, but he didn't offer any numbers or specifics.
Delta's hiring freeze affects any positions where employees do not deal directly with customers.
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