Delta Air Lines Inc. planes sit on the tarmac at LaGuardia Airport (LGA) in New York, U.S., on Monday, Oct. 21, 2013. Delta Air Lines Inc. is scheduled to release earnings figures on Oct. 22. Photographer: Ron Antonelli/Bloomberg

Ron Antonelli, Bloomberg


Percentage increase in passenger traffic for Delta and regional partners in December


Percentage increase in average fare per mile in latest quarter


Days without a canceled flight during the latest quarter


Percentage of flights that were on time in the latest quarter

Source: Bloomberg

Resurgent Delta posts $2.7 billion profit for the year

  • Article by: FROM NEWS SERVICES
  • January 22, 2014 - 5:48 AM

Delta Air Lines posted a record multibillion-dollar profit for 2013, beating previous forecasts and signaling a solid return to healthy financial footing for the Atlanta-based mega-carrier.

Delta’s profit for the year came to $2.7 billion, excluding a one-time accounting gain related to taxes and other items. That was $1.1 billion better than 2012 results, according to the company. The 2013 figure included a fourth-quarter profit of $558 million.

“Across the board, this was an outstanding year,” Delta Chief Executive Richard Anderson said in a written statement.

Delta’s yield — a key measure of what each passenger pays to fly one mile — rose 4 percent for the quarter. Airlines tried about a dozen fare increases last year. While most failed after competitors didn’t match them, airlines still boosted yields by an average 2 percent last year, according to the Airlines for America trade group.

Delta President Ed Bastian said demand for air travel is “solid,” and Delta expects to see “significant margin expansion” in the current quarter.

Airlines are benefiting from lower fuel prices, constraints on capacity growth, controls on operating costs and demand that’s keeping planes full, said Ray Neidl of Nexa Capital Partners, a Washington-based aerospace and transportation consulting firm. Delta was the first major U.S. carrier to report fourth-quarter results.

“Delta is on the leading edge,” Neidl said in an interview. “They’re riding a wave now, and the rest of the industry will benefit. Delta is probably one of the best-run airlines in an industry that has a lot of well-run airlines.”

Bastian also said the airline industry is showing restraint in how much flying it adds. The view on Wall Street has been that reining in growth will give airlines more power to raise fares. Delta expanded flying just 1 percent last year. It said it expects to grow 2 percent to 3 percent in the upcoming quarter.

Delta said it expects its new joint venture with Virgin Atlantic to be profitable this year. Anderson said bankers in New York are especially interested in the flights, because Delta and Virgin America together have a fuller schedule between New York and London.

Not counting a non-cash adjustment for taxes, Delta earned $558 million, or 65 cents per share, for the fourth quarter, which ended Dec. 31. Revenue rose 5.5 percent to $9.08 billion. Both figures were better than Wall Street analysts expected, not counting one-time items.

Including a one-time, $8 billion accounting benefit related to taxes, Delta’s net income ballooned to $8.48 billion, or $9.89 per share.

After years of losses culminating in bankruptcy protection in 2005, Delta has posted four years of profits. Its past losses will cut its future tax bills, which amounts to an $8 billion asset being added to its balance sheet in the fourth quarter.

In the year-earlier quarter, Delta earned $7 million, or a penny per share, after Hurricane Sandy hurt profits.

Shares of Delta rose 3.3 percent Tuesday to close at $32.08.

Delta’s full forecast was a “margin expansion” this quarter in a range of 6 percent to 8 percent, Bastian told analysts and investors on a conference call. “We are also expecting to see a strong second and third quarters, which you should see expansion there as well.”

The airline expects revenue from each seat flown a mile this quarter to climb 3 percent to 4 percent from a year earlier, he said.


The Atlanta Journal-Constitution, the Associated Press and Bloomberg News contributed to this report.

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