* Carrier looking to get North Dakota crude for refinery
* Southwest cites softer yields
Sept 6 Delta Air Lines Inc said on
Thursday it expects a "solidly profitable" third quarter even as
rising fuel prices pressure margins.
The U.S. carrier said it expects an operating margin of 9
percent to 11 percent for the third period, about one point
lower than an earlier expectation, because of higher fuel costs,
it told a Deutsche Bank investor conference.
U.S. airlines over the past two years have merged, cut back
flights to match demand and added charges for baggage and food
to boost profit. Delta and United Continental both said
capacity, or available seat miles, would fall for the remainder
of the year.
But rising fuel costs could be a major wild card as travel
goes into its typical seasonal slowdown in the fall. Oil prices
moved higher on Thursday, with U.S. crude up 1.6 percent
to $96.86 a barrel.
Atlanta-based Delta bought a Pennsylvania refinery earlier
this year to gain more control over rising fuel costs, and
expects annual savings of $300 million tied to the move.
But President Ed Bastian told the Deutsche Bank conference
on Thursday that Delta's savings could prove to be greater as
the carrier was looking to bring in Bakken crude from North
Dakota to supply the refinery at prices that could be equivalent
to West Texas Intermediate or lower. The refinery currently gets
crude from across the North Atlantic.
Southwest Airlines Co told the conference that while
its planes continue to be full, the carrier has seen softness in
yields, or revenue earned per seat.
"We have been aggressively pushing fares where we can," said
Tammy Romo, Southwest's senior vice president of planning, who
will become chief financial officer later this month.
Shares of Delta rose 4.3 percent to $9.26 and Southwest was
up 2 percent to $9.27. Other airlines also rose with industry
leader United Continental up 3.3 percent at $19.71 and US
Airways Group up 1.6 percent at $11.40.