Delta Air Lines Announces June Quarter Profit despite $1 billion+ higher fuel expense

Discussion in 'Delta Air Lines | SkyMiles' started by Delta Points, Jul 27, 2011.

  1. Delta Points
    Original Member

    Delta Points Silver Member

    Likes Received:
    Status Points:

    Company produces quarterly profit despite more than $1 billion higher fuel expense

    Jul 27, 2011

    ATLANTA, July 27, 2011 /PRNewswire/ -- Delta Air Lines (NYSE: DAL) today reported financial results for the June 2011 quarter. Key points include:

    Delta's net income for the June 2011 quarter was $366 million, or $0.43 per diluted share, excluding special items(1).
    Delta's net income was $198 million, or $0.23 per diluted share, for the June 2011 quarter.
    Strong top line revenue growth of 12% year over year helped offset more than $1 billion higher fuel expense.
    Delta generated a revenue premium, with unit revenues up 10% for the quarter.
    Delta generated $1 billion of operating cash flow and $700 million in free cash flow in the quarter. The company ended the June 2011 quarter with $5.6 billion in unrestricted liquidity.

    "High fuel prices are putting significant pressure on the industry, but the benefits of Delta’s strategic actions and the dedication of Delta employees are evident in the solid profit we produced despite more than $1 billion in higher fuel expense," said Richard Anderson, Delta's chief executive officer. "Our revenue momentum, coupled with the capacity reductions we are making in September and actions to get our non-fuel costs to 2010 levels, will generate the margins we need to hit our return targets."

    Adapting the Business for Higher Fuel Prices

    Delta is recalibrating its business to succeed in a permanent, high fuel price environment. The company's actions include:

    Using fare increases, fuel surcharges and revenue initiatives to recover fuel cost increases through ticket prices;
    Reducing its December quarter capacity by 4 – 5% year over year, an incremental 1 point reduction from previous guidance, focused in markets where revenues do not cover higher fuel costs. Domestic capacity will be down 1 – 3% and international capacity will be down 4 – 6%. In the transatlantic, Delta and its partners, Air France – KLM and Alitalia, established capacity levels as a single entity, leading to a combined reduction in transatlantic capacity of 7 – 9% for the December quarter;
    Retiring 140 of Delta's least efficient aircraft by the end of 2012, including the entire DC9 and Saab turbo-prop fleets, and 60 50-seat regional jets. Half of these aircraft will exit the fleet in 2011, which will contribute to the expected $250 million in maintenance savings for the second half of 2011 compared to the first half of the year; and
    Implementing initiatives to reduce the company's non-fuel unit costs to 2010 levels by the end of 2011, including voluntary exit programs accepted by more than 2,000 employees; consolidating more than 1.2 million square feet of facilities in Atlanta and Minneapolis; and lowering selling and distribution costs by shifting to more efficient distribution channels.

    Revenue Environment

    Delta's operating revenue grew $1 billion, or 12%, in the June 2011 quarter compared to the 2010 quarter. Traffic rose 1% on a 2.5% increase in capacity.

    Passenger revenue increased 13%, or $882 million, compared to the prior year period. Passenger unit revenue (PRASM) increased 10%, driven by a 12% improvement in yield partially offset by a 1.3 point decline in load factor. Passenger revenues were negatively impacted by $125 million as a result of the March events in Japan.
    Cargo revenue increased 25%, or $53 million, on higher cargo volume and yield.
    Other revenue increased 5%, or $50 million, from higher third-party maintenance revenue.

    As part of its plan to generate $1 billion in incremental revenue by 2013, Delta launched its new international premium economy product, Economy Comfort, on June 1. Revenue from Economy Comfort and other new seat-related products and merchandising initiatives are expected to generate $150 – 200 million in revenue in 2011.

    ............. more at link above@:)
    Davescj likes this.
    Original Member

    DYKWIA Silver Member

    Likes Received:
    Status Points:
    deltaGOLDflyer likes this.
  3. Davescj
    Original Member

    Davescj Silver Member

    Likes Received:
    Status Points:
    I'm guessing this quarter is going to be good to, since tax wont' be collected and DL is making an extra 4 -5 million per day.

Share This Page