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Delta Air Lines, US Airways Q2 Adj. Profits Beat Estimates

Delta Air Lines, US Airways Q2 Adj. Profits Beat Estimates
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7/24/2013 10:57 AM ET

Airline operators Delta Air Lines Inc. (DAL: Quote, DALRQ.PK) and rival US Airways Group Inc. (LCC: Quote) on Wednesday reported second-quarter profits that topped analysts' expectations, helped by lower fuel costs and tight control on other expenses.

Quarterly revenues at Delta missed analysts' expectations, while it topped their estimates at US Airways.

Delta reported a turnaround to profit in the second quarter, while US Airways' profit for the quarter declined 6 percent from last year on a tax provision.

Atlanta, Georgia-based Delta Air Lines' second-quarter net income was $685 million or $0.80 per share, compared to net loss of $168 million or $0.20 per share in the year-ago period.

The latest quarter's results include a charge of $159 million, related to fuel-hedging contracts and domestic fleet restructuring.

Excluding special items, adjusted net income for the quarter was $844 million or $0.98 per share. On average, 15 analysts polled by Thomson Reuters expected the company to earn $0.95 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total operating revenue edged down slightly to $9.71 billion from $9.73 billion in the same period last year. Analysts had a consensus revenue estimate of $9.74 billion.

Passenger revenue for the quarter rose 1 percent from the prior-year quarter to $8.49 billion, while cargo revenues decreased 11 percent to $232 million. Other revenues declined 6 percent from last year to $981 million.

Total operating expenses declined 8 percent to $8.79 billion. Of this, aircraft fuel and related taxes decreased 21 percent to $2.60 billion. Delta's adjusted average fuel price for the quarter was $3.03 per gallon, down 10 percent from last year.

According to Delta, consolidated traffic edged up 0.5 percent to 50.78 billion revenue passenger miles or RPMs, on a 0.8 percent increase in capacity to 59.88 billion available seat miles or ASMs. Passenger load factor was 84.8 percent, down 0.3 percentage points from last year.

Consolidated passenger revenue per available seat mile or PRASM, considered the best measure of revenue for airlines, was flat with last year at 14.19 cents. Operating cost per available seat mile or CASM, declined 9 percent to 14.69 cents.

Looking ahead to the third quarter, Delta forecasts operating margin in a range of 11 to 13 percent and system capacity to increase 1 to 3 percent.

Meanwhile, Tempe, Arizona-based US Airways reported second-quarter net income of $287 million or $1.40 per share, down from $306 million or $1.54 per share in the prior-year quarter. The latest quarter's results were adversely impacted by a non-cash provision for income tax of $67 million.

Excluding special items, adjusted net income was $324 million or $1.58 per share, compared to $321 million or $1.61 per share in the year-ago quarter. On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $1.51 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter grew 3 percent to $3.87 billion from $3.75 billion in the same quarter last year. Analysts had a consensus revenue estimate of $3.84 billion.

Total operating expenses rose 1 percent from last year to $3.38 billion, but aircraft fuel and related taxes declined 4 percent. Average aircraft fuel price declined 8 percent to $2.93 per gallon.

US Airways' consolidated traffic, measured in revenue passenger miles, grew 5.6 percent to 20.28 billion on a capacity increase of 3.4 percent to 23.83 billion available seat miles. Passenger load factor improved 1.7 percentage points to 85.1 percent.

PRASM for the airline declined 0.9 percent from last year to 14.47 cents, while operating CASM decreased 2.4 percent to 14.20 cents.

US Airways said it continues to 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.

In Wednesday's regular trading session, DAL is trading at $21.22, up $0.77 or 3.77 percent on a volume of 3.51 million shares.

Meanwhile, LCC is currently trading at $18.39, up $0.34 or 1.86 percent on a volume of 2.30 million shares.

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by RTT Staff Writer

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