Delta falls with earnings; CommScope term loan B inches up; LCDX rises, cash flat

By Sara Rosenberg

New York, Jan. 27 - Delta Air Lines Inc.'s first- and second-lien bank debt softened on Tuesday after the company came out with disappointing quarterly results.

Also in trading, CommScope Inc.'s term loan B was a little higher following news that the company is anticipating paying down some debt during the quarter, and despite a downward revision in guidance.

In other news, LCDX 10 was slightly stronger with equities, while the cash market continued to be pretty much unchanged.

Delta dips on numbers

Delta's bank debt posted some losses following the company's release of fourth-quarter financials that included a fairly big net loss, according to a trader.

The first-lien synthetic revolver (commonly referred to as the first-lien term loan) was quoted at 70 bid, 72 offered, down from previous levels of 73 bid, 74 offered, the trader said.

And, the second-lien term loan was quoted at 49 bid, 51 offered, down from previous levels of 52 bid, 53 offered, the trader added.

For the quarter ended Dec. 31, Delta reported a net loss of $1.438 billion, or $2.11 per share, compared to a net loss of $70 million, or $0.18 per share, in the comparable period last year.

Excluding special items and the impact of out-of-period fuel hedges, the net loss for the quarter was $340 million, or $0.50 per diluted share.

Revenue for the quarter was $6.713 billion, compared to $4.683 billion in 2007. The increase in revenue was a result of the completed merger with Northwest Airlines.

"Delta's proactive decision to reduce domestic capacity during 2008 mitigated the impact of the decline in demand we saw over the course of the fourth quarter. We expect the worldwide economy to be difficult throughout 2009; however, if fuel prices remain at current levels, we believe the benefit of lower fuel prices will more than offset the revenue decline,'" said Edward Bastian, president, in a news release.

Delta ends year with billions in liquidity

At Dec. 31, Delta had $6.1 billion in total liquidity and net cash collateral posted with hedge counterparties.

Total liquidity includes $4.5 billion in cash, cash equivalents and short-term investments and $500 million available under an undrawn line of credit.

Also on Tuesday, the company released projections for the March 2009 quarter and 2009 performance.

For the first quarter, the company expects non-passenger revenue to be $1.1 billion and capital expenditures to be $550 million.

For full year 2009, the company expects non-passenger revenue to be $4.8 billion and capital expenditures to be $1.6 billion.

Delta is an Atlanta-based airline company.

CommScope gains ground

In more secondary happenings, CommScope's term loan B was a touch better during the trading session after the company announced some paydown plans, according to a trader.

The term loan B was quoted at 80½ bid, 81½ offered, up from Monday's levels of 80 bid, 81 offered, the trader said.

Early in the day, CommScope said that it expects to repay $150 million or more of its term loan debt during the first quarter of 2009.

This anticipated repayment would be in addition to the $150 million of term loan debt that the company already repaid on Dec. 26.

CommScope changes guidance

Also on Tuesday, CommScope announced updates to its fourth quarter 2008 financial guidance that included a new revenue estimate of about $860 million to $865 million versus previous guidance for revenue of $875 million to $925 million.

Adjusted operating income for the quarter is now expected to be about $90 million to $95 million, excluding special items, compared to previous guidance for adjusted operating income of $80 million to $100 million, excluding special items.

"Fourth-quarter business conditions were difficult and we expect further softening in the first quarter of 2009," said Frank Drendel, chairman and chief executive officer, in a news release.

"A slow start is expected in 2009 as our customers analyze the impact of the current recession on their businesses. We are sharply reducing spending in response and have been implementing workforce reductions to manage costs and other aspects of our business.

"Despite global economic challenges, we firmly believe in the strength of our industry leading products and diversity of our business model. We also believe that the ongoing, fundamental demand for bandwidth will create long-term opportunities," Drendel continued.

"We continue to expect to have a 2009 business plan that keeps us compliant with our credit facility financial covenants," Drendel added in the release.

CommScope is a Hickory, N.C.-based provider of infrastructure services for communication networks.

LCDX strengthens

LCDX 10 headed higher during Tuesday's market hours as stocks were better, but the cash market was once again pretty flat and fairly quiet, according to a trader.

The index was quoted at 76 bid, 76.25 offered, up from the previous day's close of 75.50 bid, 76 offered, the trader said.

Nasdaq closed up 15.44 points, or 1.04%, Dow Jones Industrial Average closed up 58.70 points, or 0.72%, S&P 500 closed up 9.14 points, or 1.09%, and NYSE closed up 70.83 points, or 1.35%.

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