Dec 12 Delta Air Lines said on Wednesday
that it expected profits in 2013 to top 2012's profits and it
would introduce a plan to return cash to shareholders.
Chief Executive Officer Richard Anderson said during the
carrier's investor meeting webcast that Delta, the No. 2 U.S.
airline behind United Continental Holdings Inc, expected
a profit of $1.6 billion excluding items for this year, up about
30 percent from the year before. He said 2013 will bring "really
solid improvement" over 2012.
Anderson said Delta was looking to build a model of
sustainable profitability and differentiate itself with great
customer service in order to be "a really good place" for
shareholders to invest.
"As the industry consolidates, we can't be a commodity," he
Product improvements and competitive advantages in markets
such as New York and Atlanta would help drive revenue
improvement next year even as capacity growth stays flat, the
company said. Delta has been upgrading plane seats, refurbishing
airport lounges and expanding in-flight entertainment options to
win new passengers and entice existing ones to spend more.
The carrier said it expected fourth-quarter earnings of $200
million to $250 million, excluding items, despite disruptions
caused by superstorm Sandy. The storm barreled through the U.S.
Northeast in late October and led airlines to cancel thousands
of flights as major New York area airports shut down.
CAPITAL DEPLOYMENT PLAN
Delta also said it expected to outline a capital deployment
strategy at its June annual meeting, with the program starting
in January 2014. While Delta said it would analyze the business
with its board next year to determine that strategy, some
analysts who follow the company have raised the possibility of
share buybacks or a dividend.
Delta said net debt would come down to $10 billion next
year, compared with a level of $17 billion in 2009.
U.S. carriers have merged, stopped flying unprofitable
routes and raised ticket prices to recover in recent years.
Airlines have also created new revenue streams with baggage and
food fees, moves that have helped deliver profits in the face of
volatile fuel prices.
Delta supports industry consolidation, Anderson said,
predicting that AMR Corp's American Airlines and US
Airways Group Inc will conclude a deal "shortly." The
two airlines are in talks on a potential merger.
Delta, which acquired Northwest Airlines in 2008, has cut
costs while inking partnerships with non-U.S. airlines to
position itself for growth. Just on Tuesday, it announced the
purchase of a 49 percent stake in British carrier Virgin
Atlantic for $360 million and plans for a joint venture that
will give it expanded access at London's Heathrow Airport
The Virgin partnership will help Delta make the most of its
expansion in the New York market, where it is overhauling its
facilities at John F. Kennedy International Airport and this
summer expanded flights out of LaGuardia after a swap of gates
with US Airways in the Washington, DC, market. Delta said it
expected LaGuardia to be a profitable center for the company
The carrier is also retiring smaller, less efficient planes
from its fleet, and earlier this year took the unusual step of
buying a refinery to help reduce its overall fuel bill.
Bombardier Inc, which last week won an order
valued at up to $3.29 billion from Delta for 40 CRJ900 jets and
an option to buy an added 30, will assist the carrier in
removing some 50-seat planes from its fleet.