* Adjusted 1st-qtr profit 33 cts/share vs 29 cents estimate
* Profit surges despite cancellations in wake of winter
* Operating margin to expand in current quarter
* Shares up about 5 pct
(Adds analyst comment, outlook details, updates stock price)
By Karen Jacobs
April 23 Delta Air Lines Inc reported a
higher-than-expected first-quarter profit on Wednesday and gave
a strong outlook for the current period, sending its shares up
nearly 5 percent.
The carrier forecast that operating margin, a measure of
income to costs, and passenger unit revenue would both expand in
the current period.
Delta "has been outperforming on the revenue front and costs
are being kept in line," said Kevin Crissey, an airline analyst
with Skyline Research.
Delta, the third-largest U.S. airline by revenue behind
American Airlines Group Inc and United Continental
Holdings Inc, said gains in corporate market share and
fees for items such as seat upgrades and priority boarding would
bolster the second quarter.
In the first quarter, strong demand helped overcome the
negative effect of 17,000 flight cancellations from winter
storms that shaved $90 million from revenue. The company
benefited from lower fuel and plane maintenance costs.
Net income was $213 million, or 25 cents a share, up from
$7 million, or 1 cent a share, for the year-earlier first
Excluding items such as fuel-hedge contract adjustments and
charges for fleet changes, profit was 33 cents a share, compared
with 29 cents expected by analysts on average, according to
Thomson Reuters I/B/E/S.
Quarterly revenue rose 5 percent to $8.92 billion. Yield, a
measure of the average airfare paid per mile flown, rose 1
percent to 17.21 cents. Passenger revenue per available seat
mile, or unit revenue, rose 3 percent to 14.24 cents.
Operating expenses were roughly flat in the quarter. Costs
for fuel and related taxes fell 3 percent and expenses tied to
maintenance of aircraft dropped 9 percent.
Atlanta-based Delta bolstered revenue by charging more for
seats with greater leg room, replacing 50-seat jets with larger,
more cost-efficient planes while buying a refinery to help
reduce fuel expenses.
Delta "continues to get higher yields from attracting more
corporate travelers," said S&P Capital IQ equity analyst Jim
Delta said it expected an operating margin of 14 to 16
percent for the second quarter, better than the year-earlier
period's 11 percent. That compared with Crissey's expectation of
12 to 14 percent.
The carrier forecast that unit revenue would rise in the
mid-single-digit percentage range in the second period. April
unit revenue was trending up in the 6 percent range, with May
and June looking poised for growth of 5 to 7 percent, Delta said
during a conference call.
Shares of Delta were up 4.7 percent at $36.59 on Wednesday
afternoon on the New York Stock Exchange as other airlines also
gained. Delta's stock has risen about 33 percent this year,
compared with a 22 percent rise for United and a 45 percent rise
(Editing by Franklin Paul, Sofina Mirza-Reid, Chizu Nomiyama
and Matthew Lewis)