Delta Airlines

Delta's (DAL) net loss widened to $646 million, or $5.16 per share, compared with $164 million, or $1.36 per share, in the third quarter of 2003. Delta reported $3.87 billion in revenue, up from $3.66 billion in revenue in the third quarter of 2003.

Let's do some quick arithmetic. Revenue is up almost 6%, but their loss quadrupled?! How is that possible? Jet fuel costs are to blame. Surely airlines use derivative contracts to hedge their fuel costs? Well, yeah, but . . .

Delta had long-term hedge contracts to buy fuel at 76 cents a gallon but sold them in February for $83 million in cash. The move was a bet that oil prices were going to fall. But jet fuel prices skyrocketed to $1.58 a gallon, and Delta — which burns about 2 1/2 billion gallons of jet fuel a year — has lost millions of dollars in the untimely sale. Delta said in July that surging fuel prices would cost it $680 million more this year than last. But the airline issued that statement when oil was selling for about $40 a barrel. Since then, oil prices have surged more than 25 percent.