Delta Air Lines Inc. (DAL) Tuesday said its first quarter net loss narrowed from the prior year on higher revenues as a result of its merger with Northwest Airlines. Delta also said the loss was due to hedging of fuel and lower passenger revenues. However, excluding special items, earnings were breakeven. Delta said it intends to eliminate its entire 14 B747-200 freighter fleet and to reduce its international capacity by 10%. The airline company would also levy an additional $50 fee from international customers to check a second bag from today, to help it out of the deepening crisis in the global economy. Delta is currently trading more than 16%, on the NYSE.
For the first quarter, Delta Airlines reported a net loss that narrowed to $794 million or $0.96 per share from $6.39 billion or $16.15 per share in the prior-year quarter.
Quarterly results include $684 million in fuel hedge losses and special items. Losses related to special items amounts $101 million, consisting primarily of a $50 million charge for severance reflecting voluntary workforce reductions offered in January 2009, as well as a $49 million in merger-related expenses. Excluding items, Delta's results were breakeven for the quarter. Net loss excluding special items was $693 million, or $0.84 per share, compared to a loss of $274 million in the year ago quarter. Net loss excluding fuel hedge losses and special items for the current quarter was $9 million.
Results for the quarter also reflect a benefit of $100 million in merger synergies and also expect to generate around $500 million in total synergies in 2009. Delta completed its merger with Northwest Airlines on October 29, 2008.
On average, eight analysts polled by Thomson Reuters expected a loss of $1.01 per share for the quarter. Analysts' estimate typically excludes one-time items.
Delta's operating revenue for the March quarter jumped 40% to $6.68 billion from $4.77 billion in the prior year quarter. However, the operating revenue was below Street estimates of $6.72 billion. On a combined basis, operating revenue was down 15% at $1.2 billion.
On a combined basis, passenger revenue dropped 18% to $5.60 billion from $6.81 billion, and Cargo revenue plunged 44% to $185 million from $331 million, while other net revenues grew 18% to $898 million from $761 billion, reported during the same quarter a year ago.
In response to lower Cargo revenue, Delta said it would ground the entire fleet of 14 B747-200 freighter aircraft effective Dec. 31, 2009, to improve profitability.
In the sequentially preceding fourth quarter, the company reported a wider loss of $1.44 billion or $2.11 per share, hurt by merger related charges and fuel-hedging losses. Total operating revenues surged 43% to $6.71 billion from the year-ago quarter.
Among others in the industry, AMR Corp. (AMR), parent of American Airlines, Inc., reported a first quarter loss that widened to $375 million or $1.35 per share, as dwindling traffic and lower fares erased some of the benefits of lower fuel prices. Consolidated revenues of AMR were down 15.1% at $4.84 billion.
Operating expense for the quarter were down at $7.2 billion primarily due to a $6.1 billion goodwill impairment charge recorded in the prior-year quarter and lower fuel expenses. On a combined basis, excluding items, operating expense decreased $1.1 billion due primarily to lower fuel expense.
Edward Bastian, Delta's president said, "Despite signs of stabilization in recent demand trends, we expect the revenue environment to continue to be under significant pressure for the remainder of the year. We believe lower fuel prices, combined with a focus on accelerating merger synergies and other initiatives will more than offset the revenue decline."
Delta said it would now collect an additional fee of $50 from international passengers to check a second bag, effective Tuesday, for international travel beginning July 1, in an effort to help it out of the weakening economy. Delta expects the new fee to generate more than $100 million annually.
Delta would also slice its international capacity by 10%, starting September 2009, in addition to the grounding of its 14 B747-200 freighter fleet to improve profitability. The company also said more than 2,500 employees used its voluntary early out and early retirement programs offered in January 2009.
Consequently, in the December 2009 quarter, Delta expects a 6%-8% reduction in system capacity with a 9%-11% reduction in international capacity.
Delta hedged 77% of its fuel consumption for the March 2009 quarter, which drove $684 million in realized fuel hedge losses for the period. As a result, Delta's average fuel price for the March quarter was $2.26 per gallon.
Looking ahead to the second quarter, Delta Air Lines expects operating margin in the range of 4% - 6% and Capital expenditures of $650 million. Delta also sees a 5% to 7% drop in System capacity and a 6% to 8% decline in Mainline capacity, compared to the second quarter of 2008.
For fiscal 2009, Delta expects operating margin to be 4% - 6% and Capital expenditures to be $1.5 billion. Both the System and the Mainline capacity are expected to decline 6% - 8% from 2008.
In addition, Delta also said it remains on track to achieve its Single Operating Certificate by the end of 2009.
On March 23, 2009, brokerage Stifel Nicolaus downgraded Delta share to 'Hold' from 'Buy', with a mean target of $18.00.
DAL is currently trading at $7.96, up $1.15 or 16.89%, on a volume of 8.92 million shares. In the last 52-week period, the stock traded in the range of $3.51 to 12.65, on a three-month average volume of 14.02 million shares.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.