Delta Air Lines 2Q profit falls 58 percent
Associated Press
NEW YORK - Delta Airlines under-performed analysts expectations in financial results for the second quarter released today. The Atlanta-based airlines' revenue increased 12 percent, better than expected, but had a net income loss of 58 percent.
Hunter Keay, senior airline analyst at Wolfe Trahan & Co. in New York said high fuel prices and too many seats available will hurt Delta's financial performance into the fall.
"And when airlines can't fill planes they can't really price tickets high enough to offset $3.30 jet fuel. So unfortunately it's probably a bad combination of both at this point," Keay said.
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Delta is taking steps to offset the high price of fuel, including reducing flying in the fourth quarter by more than originally planned and giving voluntary buyouts to 2,000 workers.
Costs for the buyouts, and higher jet fuel expenses, contributed to a 58 percent decline in second-quarter profit.
Keay said Delta is doing what it can to cut maintenance costs by retiring planes and flying fewer transatlantic routes, as well as cutting back flights to Tokyo. Flights to Japan have fallen since the earthquake and tsunami.
The Atlanta airline earned $198 million, or 23 cents per share. A year ago it earned $467 million, or 55 cents per share. Revenue rose 12 percent to $9.15 billion. FactSet says analysts expected a profit of 46 cents per share on revenue of $9.16 billion. Fuel costs rose 36 percent to $2.66 billion.
Delta Air Lines Inc. said Wednesday it now plans to cut its overall flying in the last quarter of the year by 4 to 5 percent, mostly internationally.
(Copyright 2011 by The Associated Press. All Rights Reserved.)
