Jan 21 Delta Air Lines Inc reported a
higher-than-expected fourth-quarter profit on Tuesday, aided by
lower fuel costs and increased fares, and its shares gained more
than 3 percent.
Delta, the third-largest U.S. airline behind American
Airlines Group Inc and United Continental Holdings Inc
, said it would "significantly improve" profitability
this year by controlling costs and offering more customer
The carrier, which cut its capital spending forecast for
2014 to $2.3 billion from $2.5 billion, said that margins would
widen. It forecast an operating margin of 6 percent to 8 percent
for the first quarter. That's higher than estimates of 5.4
percent from airline analyst Helane Becker of Cowen & Co and 5.8
percent from Fred Lowrance of Avondale Partners.
"The strong earnings reflect not only what Delta has been
doing, including investments in its airports and products, but
also the fact that the airline has been able to attract and keep
more business travelers," said Henry Harteveldt, a travel
industry analyst with Hudson Crossing LLC in San Francisco.
He said Delta was also managing its business so that it
sells fewer seats at deep discounts.
"Delta is going into 2014 from a very solid position,"
Passenger revenue gains at Delta were strongest in the
United States and Latin America, helped by holiday travel in the
fourth quarter. Corporate ticket revenue rose 7 percent from a
EXCLUDING ITEMS, PROFIT DOUBLES
Profit before one-time items more than doubled in the fourth
quarter to $558 million, or 65 cents a share. Analysts on
average, were expecting 63 cents, according to Thomson Reuters
Net income totaled $8.5 billion, or $9.89 a share, including
a noncash gain of $8 billion from a reversal of a tax allowance.
A year earlier, Delta earned $7 million, or 1 cent a share, on
Quarterly revenue rose 6 percent to $9.08 billion. Yield, a
measure of the average airfare paid per mile flown, rose 4
percent to 17.05 cents.
Operating expenses increased 2 percent, while costs for
aircraft fuel and related taxes fell 7 percent.
Atlanta-based Delta acquired Northwest in 2008 and bolstered
revenue by charging more for seats with greater leg room,
replacing 50-seat jets with larger planes that carry more
passengers and buying a refinery to reduce fuel costs.
The carrier reduced debt and formed partnerships with
non-U.S. airlines such as Britain's Virgin Atlantic Airways
and Brazil's Gol to increase traffic in those
The moves enabled Delta to pay its first dividend in a
decade last year and start a $500 million share buyback program
to boost shareholder returns. Delta rejoined the Standard &
Poor's 500 Index last fall.
Shares of Delta were up 3.2 percent at $32.06 in afternoon
trading. The shares have more than doubled since the beginning