Delta Air Lines loses $318 million in the 1Q due to rising fuel costs and over capacity on the trans-Atlantic routes

Delta Air Lines (Atlanta) reported a net loss for the first quarter of $318 million, or $0.38 per diluted share, which includes $2 million of special items.

The loss was driven by the $610 million impact of 30% higher fuel prices, Delta’s net loss was $128 million worse than the first quarter in 2010, excluding special items.

Delta generated $452 million in free cash flow for the quarter and its adjusted net debt at quarter end was $14.5 billion.

Delta ended the first quarter 2011 with $5.5 billion in unrestricted liquidity, which includes $1.6 billion in undrawn revolving credit lines.

Delta has reduced its capacity plans for the second half of 2011, which resulted in a four point reduction in planned capacity. The company is targeting reductions in markets where revenue improvements have not kept pace with rising fuel costs. Delta now expects system capacity for the post-Labor Day period to be down approximately 3% compared to the prior year period.

Copyright Photo: Brian McDonough. Delta has previously announced the early retirement of 130 of Delta’s least efficient aircraft over the next 18 months, including the DC-9-51 and SAAB 340B turbo-prop fleets, and 60 50-seat regional jets. Please click on the photo for additional information on the early retirement of the remaining DC-9-51s.