* Delta a penny shy of estimates as US Airways beats
* Third-quarter revenue softer than analysts expected
* Delta shares slide 1.6 pct; US Airways up 2.3 pct
Oct 24 U.S. carriers Delta Air Lines and
US Airways Group turned in higher quarterly profits on
Wednesday and indicated revenue trends looked to be improving
following a soft September.
Delta's profit was a penny shy of analysts' average
estimates, excluding special items, while US Airways topped
estimates. Revenue at both carriers was lower in the quarter
than analysts expected.
Shares of Delta slid 1.6 percent to $9.99 in afternoon
trading, while US Airways was up 2.3 percent at $12.37.
Delta said unit revenue - a measure of pricing power and how
full planes are - would likely rise 4 percent to 5 percent in
October after a 3 percent increase in the third quarter, driven
by strength in business travel. The carrier added that it
expects "robust" leisure traffic for the Thanksgiving and
US Airways said it was "cautiously optimistic" about demand,
and forecast monthly revenue rises for October through December.
Performance in unit revenue weakened at many U.S. airlines
toward the end of the third quarter, which is a traditionally
strong period that usually benefits from some summer travel.
Given the September softness, the reports are "very much in
line" with expected results, said Bill Swelbar, a research
engineer at MIT's international center for air transportation.
FOCUS ON COSTS
Delta said it would undertake cost-cutting to hold down
non-fuel expenses, which have risen in recent quarters. The
carrier said it planned a $1 billion program over the next two
years that will include replacing 50-seat jets with larger
aircraft that will cost less to operate, and shifting more
business to its website.
Southwest Airlines last week also stressed a need to
cut costs, saying it would control hiring over the next year in
a bid to reduce overhead by $100 million. Excluding items,
Southwest's third-quarter profit beat analysts' average forecast
but was down from a year earlier on flat revenue.
Costs are "a continuing battle" for airlines, Swelbar said.
"I would imagine these companies will continue to manage
capacity and do anything and everything they can to remove fixed
costs from the operation."
U.S. carriers have merged, stopped flying unprofitable
routes and raised ticket prices to recover from the 2008-09
downturn. Carriers have also cut back flying to match demand and
created new revenue streams with baggage and food fees, moves
that have helped keep profits coming in the face of volatile
Delta had net income of $1.05 billion, or $1.23 a share, for
the third quarter, compared with $549 million, or 65 cents a
share, a year earlier.
Results included special items, such as a $440 million gain
tied to fuel hedges that together added up to a $279 million
gain. Excluding items, Delta earned 90 cents a share, compared
with 91 cents expected by analysts, according to Thomson Reuters
Revenue at Delta rose 1 percent to $9.92 billion, just
missing the analyst estimate of $9.96 billion.
At US Airways, which is in talks with AMR Corp's
American Airlines about a potential merger, third-period net
income was $245 million, or $1.24 a share, compared with $76
million, or 41 cents a share, a year earlier.
Excluding one-time items, profit was 98 cents a share,
compared with 92 cents expected by analysts on average. US Air
said revenue rose 2.8 percent to $3.53 billion, compared with
$3.55 billion expected by analysts.