* First-quarter adjusted profit 10 cents vs. estimate 6
* Budget cuts seen hurting April unit revenue
* Shares up 4.2 pct
April 23 Delta Air Lines Inc on Tuesday
reported a higher-than-expected first-quarter profit as revenue
rose, and its shares gained 2.3 percent.
The carrier forecast a positive operating margin for the
current quarter but added that federal budget cuts and lighter
demand from leisure travelers were expected to hurt a key
revenue measure in April.
Passenger revenue per available seat mile, an important
measure, will likely fall 2 percent to 3 percent this month,
Delta said. For the first quarter, that revenue gauge was up 4
Still, Delta said it expected declining oil prices to help
offset the near-term revenue weakness.
"While we are seeing some revenue softness, we are also
benefitting from lower fuel costs, allowing us to continue our
path of margin expansion even in a sluggish economic
environment," President Ed Bastian said in a company statement.
Excluding items, first quarter results topped estimates.
Delta has been upgrading aircraft seats and expanding food
and entertainment options to entice passengers to spend more. It
has also launched partnerships with non-U.S. airlines and
expanded flights in key business markets such as New York to
position itself to gain new passengers.
Net income was $7 million, or 1 cent a share, for the first
quarter, compared with $124 million, or 15 cents a share, a year
The latest quarter had various special items, including a
$24 million gain tied to fuel-hedge contracts and a cost of $102
million related to assets such as planes and facilities.
Excluding items, profit came to 10 cents a share, compared
with 6 cents expected by analysts on average, according to
Thomson Reuters I/B/E/S.
Though operating revenue rose 1 percent to $8.5 billion,
expenses rose 3 percent, with costs for salaries rising 8
percent. Interest expense and amortization also hurt profit.
Operations at the Pennsylvania refinery Delta bought last
year had a loss of $22 million in the quarter, hobbled by
various factors including problems with supply in the wake of
last year's Superstorm Sandy.
Shares of Delta were up 4.2 percent to $15.78 in morning