Airline operators Delta Air Lines, Inc. (DAL) and rival US Airways Group, Inc. (LCC), the first two of the large US airlines to report first-quarter results, reported Tuesday profits that topped analysts' expectations, reflecting revenue growth. Quarterly revenues at Delta missed analysts' expectations by a whisker, while it topped their estimates at US Airways.
"Our results represent Delta's strongest March quarter financial and operational performance in over a decade and I want to thank Delta people worldwide for all the hard work that went into producing these results for our company," CEO Richard Anderson said in a statement.
Atlanta, Georgia-based Delta Air Lines reported net income of $7 million or $0.01 per share for the first quarter, sharply lower than $124 million or $0.15 per share in the prior-year quarter.
Excluding special items, Delta's net income for the quarter was $85 million or $0.10 per share, compared to a loss of $39 million or $0.05 per share in the year-ago quarter.
On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.06 per share for the quarter. Analysts' estimates typically exclude special items.
Total operating revenue for the quarter edged up 1 percent to $8.50 billion from $8.41 billion in the same quarter last year, but missed twelve Wall Street analysts' consensus estimate of $8.51 billion by a whisker.
Passenger revenues for the quarter rose edged up 1.4 percent to $7.33 billion, while cargo revenues decreased 2.4 percent to $238 million from the prior-year quarter. Other revenues totaled $929 million, down 1.4 percent from last year.
According to the airline, consolidated traffic edged down 0.6 percent to 43.08 billion revenue passenger miles, on a 2.5 percent decline in capacity to 53.22 billion available seat miles or ASMs. Passenger load factor reached 81.2 percent, up 1.5 percentage points from last year.
Consolidated Passenger Revenue per Available Seat Mile or PRASM, considered the best measure of revenue for airlines, grew 4.1 percent to 13.83 cents from the prior-year quarter, and operating Cost per Available Seat Mile or CASM, increased 6 percent to 15.61 cents from the year-ago quarter.
Total operating expenses for the quarter increased 3 percent to $8.28 billion, primarily including aircraft fuel expenses of $2.29 billion, up 3 percent from last year.
"With a solid financial foundation and building momentum from initiatives like our LaGuardia expansion, Virgin Atlantic investment and new Terminal 4 at New York-JFK, we are well positioned to generate significant improvements in Delta's profitability going forward," Anderson added.
Looking ahead to the second quarter, Delta forecasts operating margin to increase 9 to 11 percent, and anticipates April unit revenues to decrease 2 to 3 percent from last year.
Meanwhile, Tempe, Arizona-based US Airways reported net income of $44 million or $0.26 per share, lower than $48 million or $0.28 per share in the prior-year quarter.
Excluding items, adjusted net income for the quarter was $55 million or $0.31 per share, compared to a loss of $22 million or $0.13 per share in the year-ago quarter.
On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.28 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter grew 3.5 percent to $3.38 billion from $3.27 billion in the same quarter last year, and topped ten Wall Street analysts' consensus estimate of $3.37 billion by a whisker.
The company noted that strong passenger demand and record passenger load factors led to record revenue performance.
"We are extremely pleased to produce these record first quarter results. Our 32,000 hard-working team members continue to run a safe and reliable airline for our customers. These outstanding results are the product of their efforts and provide a solid foundation as we plan for combining with American Airlines," Chairman and CEO Doug Parker said in a statement.
Total operating expenses grew 2.2 percent to $3.28 billion from last year, but fuel expense declined 2.1 percent. Average aircraft fuel price decline 0.9 percent to $3.24 per gallon from last year.
US Airways' consolidated traffic, measured in revenue passenger miles, grew 4.4 percent to 17.49 billion on a capacity increase of 1.3 percent to 21.42 billion available seat miles, and passenger load factor improved 2.4 percentage points to 81.7 percent from last year.
PRASM for airline grew 1.3 percent to 13.80 cents from last year, while operating CASM edged up 0.9 percent to 15.30 cents from the year-ago quarter.
US Airways said it expects the $11 billion merger deal with AMR Corp. (AAMRQ), agreed on February 14 to create the new American Airlines, to close in the third quarter. The new American will offer more than 6,700 daily flights to 336 destinations in 56 countries around the world and is expected to generate more than $1 billion of revenue and cost synergies by 2015.
"Looking forward, our integration planning work with American is going well and we continue to expect that the merger will close in the third quarter of this year. The entire US Airways team is looking forward to working with our colleagues at American to build the premier global airline." Parker added.
In Tuesday's regular trading session, DAL is currently trading at $15.74, up $0.60 or 4.00% on a volume of 2.11 million shares. In the past 52-week period, the stock has been trading in a range of $8.42 to $17.25.
Meanwhile, LCC is currently trading at $15.96, up $0.44 or 2.86% on a volume of 1.45 million shares. In the past 52-week period, the stock has been trading in a range of $8.99 to $17.43.
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