Delta to take $1.65 billion in charges

Delta Air Lines Tuesday said it will take a $1.65 billion charge in the second quarter related to income taxes and said it could not predict when it would return to profitability, sending its shares lower.

The No. 3 U.S. airline, which has seen all three of its top executives replaced this year, said in a statement it will incur a $1.53 billion charge related to deferred income taxes and a $117 million charge for its pilot pension plan as more pilots than usual retired.

The Atlanta-based airline is negotiating with its union pilots — currently the highest-paid in the industry — about wage concessions in a bid to avoid bankruptcy.

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The head of the pilots union told Reuters recently he was looking for ways to make pilots more productive. The Air Line Pilots Association is preparing to make a formal offer of concessions in the next few weeks.

Delta said its financial performance in 2004 has been affected by higher fuel costs and lower-than-expected domestic yields, or average fares.

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"As a result, it is now unclear as to the time of when the company will be able to generate sufficient taxable income to use its deferred income tax assets," Delta said.

The airline also said it will stop recording income tax benefits on its statement of operations for the "foreseeable future."