Delta Passenger Revenue Languishes; Profit Tops Expectations
April 14 2016 - 8:40AM
Dow Jones News
Delta Air Lines Inc. on Thursday said it expects passenger unit
revenue to fall in the current quarter after the key industry
benchmark fell more than anticipated in the most recent
quarter.
Still, the No. 2 air carrier by traffic saw its earnings in the
first quarter beat expectations and shares, which have risen 6%
over the past three months, added 1.3% premarket to $48.65.
Delta said it expects passenger unit revenue—which measures how
much money airlines take in for each passenger flown a mile—to fall
2.5% to 4.5% in the second quarter.
"While this is an improvement over our March quarter
performance, we are focused on getting unit revenues back to a
positive trajectory and we will make adjustments to our fall
capacity levels if we are not making sufficient progress over the
coming months," said Glen Hauenstein, Delta's incoming
president.
In the most recent quarter, passenger unit revenue fell 4.6%,
including a 2 point foreign-currency dent, and worse than the
airline's anticipation for a 2.5% to 4.5% decline.
Over all for the quarter, Delta reported a profit of $946
million, or $1.21 a share, up from $746 million, or 90 cents, a
year earlier. Excluding certain items, earnings rose to $1.32 a
share from 45 cents in the year-earlier quarter.
Revenue edged down 1.5% to $9.25 billion, pressured $125 million
by foreign currency exchange and $5 million by the deadly terrorist
attack in Brussels.
Analysts polled by Thomson Reuters had forecast adjusted
earnings of $1.30 on $9.27 billion in revenue.
Delta's fuel price for the quarter ended in March was $1.33 a
gallon, down sharply from $2.93 a gallon a year earlier. Overall
fuel expense declined 34% to $1.39 billion during the period. The
airline industry has broadly benefited from lower jet-fuel prices
as the price of oil continues to sink, propping up profits.
For the current quarter, the airline estimates fuel costs
between $1.48 and $1.53 and system capacity will rise 2% to 3%.
"The March quarter represented the peak of our nonfuel cost
pressures for the year and we expect our performance will improve
as we move through the remainder of the year, allowing us to
achieve our goal of keeping our nonfuel unit cost growth below 2%,"
said Chief Financial Officer Paul Jacobson.
Capacity increased 2.7%, in line with expectations.
Delta nosed ahead of United Continental Holdings Inc. in 2015 to
become the nation's No. 2 airline, adding a flourish to the
Atlanta-based carrier's strong performance in recent years.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
April 14, 2016 08:25 ET (12:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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