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Delta drops profit forecast, AirTran in black for Q2

Delta Air Lines Inc, the world's biggest carrier, said on Wednesday it no longer expects to make money this year, while smaller cross-town Atlanta rival AirTran Holdings posted a higher-than-expected profit in the second quarter. AirTran shares rose 12.2%, while Delta shares edged 1.8% higher in early trading on the New York Stock Exchange.

Delta continues to work through costs associated with its merger with Northwest Airlines in October that made it the world's largest airline, and told employees that it may need to cut more jobs to stay competitive amid the recession-fueled falloff in business. “We are not planning for any meaningful recovery in the coming months and no longer expect to be profitable this year,” Chief Financial Officer Hank Halter said in a memo to staff that was including in a regulatory filing. Delta reported a quarterly loss of $257 million, or 31 cents per share. It said the recession drove down revenues by more than $3 billion in the first half of the year.

Delta said it would continue to “right size” capacity and keep unit costs in check, but it reiterated that it may need to cut more jobs. “While we can make no guarantees in the current environment, our goal continues to be to avoid involuntary furloughs of front-line employees,” Halter said in the memo. (Reuters)