Delta Earnings Beat Views
July 14 2016 - 8:50AM
Dow Jones News
Delta Air Lines Inc. on Thursday said it has decided to reduce
its U.S.-U.K. capacity on its winter schedule because of additional
foreign currency headwinds from the steep drop in the British pound
and the economic uncertainty from Brexit.
The No. 2 air carrier by traffic announced the reduction with
its results for the June quarter. In the quarter, earnings rose a
better-than-expected 4.1%, but revenue fell more than analysts
anticipated.
Delta's plan to reduce its U.S.-U.K. capacity by six percentage
points will, among other things, reduce total system capacity by
about one point in the December quarter, and the company now
expects system capacity to grow by just 1% year-over-year during
the period.
The company said that while the revenue environment "remains
challenging, with persistent headwinds from close-in domestic
yields and geopolitical uncertainty," it remains focused on
achieving its goal of positive unit revenue by year end. Passenger
unit revenue measures how much money airlines take in for each
passenger flown a mile.
Delta expects passenger unit revenue to fall in the current
quarter after the key industry benchmark fell more than anticipated
in the most recent quarter. In the recently completed second
quarter, passenger unit revenue dropped 4.9%; the airline had
anticipated a 2.5% to 4.5% decline.
For the third quarter, the company expects passenger unit
revenue to fall 4% to 6%.
Over all for the second quarter, Delta reported a profit of
$1.55 billion, or $2.03 a share, up from $1.49 billion, or $1.83, a
year earlier. Excluding certain items, earnings rose to $1.47 a
share from $1.27 in the year-earlier quarter and above analyst
estimates for $1.45.
Revenue slipped 2.4% to $10.45 billion, below analysts estimates
for $10.49 billion. The top line was dented $65 million by foreign
currency headwinds.
Shares in the company, which have fallen 22% this year, slid
another 1% premarket to $39.15.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
July 14, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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