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Delta Air Lines Posts Profit On Fuel Hedging Gains - Update

Delta Air Lines Posts Profit On Fuel Hedging Gains - Update
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4/25/2012 9:17 AM ET

Delta Air Lines (DAL: Quote) on Wednesday reported a profit for the first quarter, compared to a loss last year, benefiting from gains related to fuel hedging. Passenger revenues were up even as the airline made fewer seats available.

Net income for the quarter was $124 million or $0.15 per share, compared to a loss of $318 million or $0.38 per share last year.

However, Delta's net operating loss was $39 million, or $0.05 per share, in line with market expectations. Analysts' estimates typically exclude one-time items.

The latest results included $151 million in mark-to-market gains for fuel hedges settling in future periods, a $39 million gain associated with the exchange of slots at New York-LaGuardia and Washington-Reagan National as well as a $27 million charge for fleet, facilities and other items.

Operating revenue increased 9 percent to $8.41 billion from $7.75 billion in the prior-year quarter, on 3 percent lower capacity. Analysts estimated revenues of $8.36 billion for the quarter.

Passenger revenue climbed 10 percent to $7.23 billion, but cargo revenue slipped 2 percent from last year.

Despite lower capacity, traffic increased 1 percent as load factor increased 3.3 points to 79.7 percent. Passenger revenue per available seat mile improved 14 percent from last year.

Delta's on time arrival rate improved by 7.3 points to 87.3 percent and its completion factor increased 2.8 points to 99.6 percent.

Looking ahead to the second quarter, the company projects operating margin of 8 percent to 10 percent and capital expenditures of $400 million. Fuel price, including taxes and net hedge impact, is estimated to be $3.28. Richard Anderson, Delta's CEO, said, "...we expect the June quarter and full year will be not only solidly profitable but also a significant improvement over last year, despite higher fuel prices."

DAL closed on Tuesday at $10.48, up from the prior close of $10.39, on a volume of 9.78 million shares.

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by RTT Staff Writer

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