Tags: Delta | Profit | Misses | Fuel

Delta Profit Misses Street View, Hit by Fuel Costs

Tuesday, 25 Oct 2011 09:42 AM

Delta Air Lines Inc.'s quarterly profit fell short of Wall Street expectations due to higher fuel costs, and its shares were down 2.2 percent in premarket trading.

Delta said it was intent on reducing non-fuel expenses as a skittish global economy threatens to stem demand for air travel.

"We anticipate that the current environment of high fuel prices and an uncertain economy will continue into 2012," Chief Financial Officer Hank Halter said in a staff memo.

The company on Tuesday reported third-quarter net income of $549 million, or 65 cents per share, up from $363 million, or 43 cents per share, a year earlier.

Excluding one-time items, profit was 91 cents a share. Analysts on average expected 93 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 10 percent to $9.8 billion, aided by higher fares. Passenger revenue per available seat mile, an important measure, climbed 11 percent.

Operating expenses increased 13 percent, with aircraft fuel and related costs up 42 percent.

The carrier's average fuel price was $3.29 per gallon in the quarter, including non-cash market adjustments. Delta forecast a fourth-quarter fuel price of $2.98 per gallon, including taxes and settled hedges.

Atlanta-based Delta, the second-largest airline behind United Continental Holdings, has offered voluntary buyouts to employees and consolidated facilities to cut fixed costs. It has also invested in new airplane seats and better food and wine offerings to boost revenue.

U.S. carriers as a whole are cutting back service, retiring fuel-inefficient planes and raising fares to help cover rising fuel costs.

Delta's results follow quarterly losses posted last week by Southwest Airlines, which was hurt by non-cash markdowns related to fuel hedges, and American Air parent AMR Corp., which cited fuel costs and a strong U.S. dollar that eroded overseas sales.

© 2017 Thomson/Reuters. All rights reserved.

   
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Delta Air Lines Inc.'s quarterly profit fell short of Wall Street expectations due to higher fuel costs, and its shares were down 2.2 percent in premarket trading. Delta said it was intent on reducing non-fuel expenses as a skittish global economy threatens to stem demand...
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Tuesday, 25 Oct 2011 09:42 AM
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