Delta, US Airways bring major airline losses to $951M

Delta Air Lines Inc. and US Airways Group Inc. reported first-quarter losses as surging prices pushed jet fuel past labor as their No. 1 expense, bringing the total deficit for the five biggest U.S. carriers to $951 million. Delta is the dominant carrier serving Minnesota.

The combined loss, excluding special items, widened from a year-ago deficit of $892 million. Climbing fuel costs have led four of the five largest to slow growth plans for the year by cutting unprofitable flights or grounding planes.

"Fuel is the biggest challenge facing this industry," Delta Chief Executive Officer Richard Anderson said in a statement today. On a net basis, the deficit widened to $1.08 billion from $978 million a year earlier.

Delta, United Continental Holdings Inc., American Airlines parent AMR Corp. and US Airways all reported results better than analysts expected, while Southwest Airlines Co. met the average estimate. Southwest, the largest low-fare carrier, was alone in reporting a profit.

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Six system-wide fare increases taken by the carriers during the quarter failed to totally offset a 41 percent increase from a year earlier in the price of jet fuel for immediate delivery in New York harbor.

The adjusted loss at Delta, the world's second-biggest carrier, narrowed to $320 million, or 38 cents a share, less than the 50-cent average loss estimate of 13 analysts surveyed by Bloomberg. US Airways' adjusted loss widened to $110 million, or 68 cents, excluding some items. The result was narrower than the 72-cent average from 13 analysts.

Delta said it would retire more planes over the next 18 months, including about 60 of its 50-seat regional jets and some Saab turboprops. The Atlanta-based airline also will park 20 planes in its main jet fleet, including some widebodies used on international routes, Anderson said on a conference call.

"Seventy percent cost recapture isn't enough," he said. "We must fully recoup the costs on every flight, every day."

The carrier has also trimmed its capital spending budget for the year by $300 million, to $1.2 billion, and it plans to reduce capacity by 4 percentage points in the second half of the year by cutting flights in markets where fares aren't covering fuel costs. The hub in Memphis, Tennessee, will have departures cut by a quarter, Delta has said.

Cancellations during severe winter weather reduced revenue by $90 million, while the plunge in demand for travel to Japan lowered revenue by $35 million.

First-quarter revenue rose 13 percent to $7.75 billion.

US Airways is the only carrier among the five largest in the U.S. that doesn't use hedging contracts to help adjust for changes in fuel prices. The Tempe, Arizona-based airline's spending for fuel rose 37 percent to $734 million, topping expenses.

"Our first-quarter results were clearly impacted by the extremely high price of oil," Chief Executive Officer Doug Parker said in the statement.

The carrier in March trimmed growth plans for this year to 1.5 percent from 2 percent to reduce fuel use.

Including unspecified costs linked to a US Airways regional carrier and other items, the net loss widened to $114 million, or 71 cents a share, from $45 million, or 28 cents. Sales rose 12 percent to $2.96 billion.