ETF News

Delta profit takes hit as fuel costs soar

Delta Air Lines jets sit at terminal at Reagan National Airport outside Washington in this August 19, 2004 file photo. REUTERS/Larry Downing

NEW YORK (Reuters) - Delta Air Lines Inc DAL.N, the No. 3 U.S. carrier, posted a first-quarter loss on Wednesday as high fuel costs and a weakening economy roil the industry.

Delta, which emerged from bankruptcy about a year ago, said its quarterly net loss was $6.4 billion, or $16.15 per share, compared with a loss of $130 million in the same period a year earlier, when the company’s shares were unlisted.

Delta said last week it plans to buy Northwest Airlines Corp NWA.N for more than $3 billion in a bid to create the world's biggest airline by traffic.

Excluding special items, Delta said it lost $274 million, or 69 cents per share, driven by a $585 million rise in the cost of fuel. This was worse than the 55-cent loss analysts had expected, according to Reuters Estimates, and well beyond the loss of $6 million recorded a year ago.

Special items include a $6.1 billion noncash goodwill impairment charge from the decline in Delta’s market capitalization, which it blamed on sustained record-high fuel prices.

After racking up $35 billion in losses and finally emerging from a five-year slump in 2006, U.S. airlines are hoping mergers could lead to higher fares as combined carriers reduce flights and use their increased market power to raise prices.

Delta pilots will get a 3.5 percent equity stake in the new airline and have expressed support for the proposal, but the leadership of Northwest pilots has said it would use “all resources available to aggressively oppose” the deal after the two unions could not agree on how to work under one seniority umbrella.

Reporting by Christopher Kaufman; Editing by Derek Caney and Dave Zimmerman