Delta Outage Dings Revenue, Profit
October 13 2016 - 8:50AM
Dow Jones News
Delta Air Lines Inc. said a power outage that plagued service
world-wide for several days in August dented its revenue and
profit, though lower fuel costs helped soften the blow.
The nation's No. 2 carrier also said Thursday that it would
continue to face headwinds in the fourth quarter, as margins could
take a hit from unit revenue even with fuel-cost savings.
Shares edged 0.9% lower to $38.90 in premarket trading.
The Atlanta-based airline canceled thousands of flights in
August because of an equipment malfunction at its Atlanta
headquarters. This dented unit revenue by 2 points in the September
quarter, Delta said.
Unit revenue, a closely watched metric of how much an airline
takes in for each passenger flown a mile, fell 6.8% in the
September quarter. Delta had anticipated a 7% decline. For the
fourth quarter, the company said it expects passenger unit revenue
to be down 3% to 5%.
Overall for the period, Delta reported a profit of $1.26
billion, down from $1.32 billion a year ago. On a per-share basis,
profit was $1.69 a share, up from $1.65, aided by a lower
outstanding share count. Excluding certain items, earnings were
$1.70 a share, above analysts' estimates for $1.65 a share.
Revenue slipped 6% to $10.48 billion. Analysts anticipated
$10.55 billion.
Market fuel prices fell 10% during the period, the company said,
bringing fuel expenses lower.
Delta Chief Financial Officer Paul Jacobson recently said that
Delta would be the first of the three network carriers to report a
positive year-over-year increase in unit revenue, and pointed to an
improving domestic fares environment that is been replicated in its
Pacific and Latin American markets.
The company also said it would further pare down its capacity
growth for the remainder of the year and into 2017. Delta Chief
Executive Ed Bastian said the company "will be taking a cautious
approach to 2017 by keeping our capacity in line with the December
quarter's 1% growth level." Analysts were looking for overall
capacity growth for 2017 to be pegged around 2%.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
October 13, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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