Delta profit overshoots estimates as demand lifts fares

Delta Air Lines Inc., buoyed by rising fares, posted a profit that beat Wall Street analysts' estimates as U.S. carriers began reporting earnings for what may be the industry's best quarter since 2007. The Atlanta-based carrier is the dominant airline serving Minnesota and is a major employer in the state.

Third-quarter net income was $363 million, or 43 cents a share, after a year-earlier loss of $161 million, or 19 cents, Delta said today in a statement. Profit excluding certain costs to write off debt and retire regional jets was $1.10 a share, beating the 94-cent average of 13 estimates compiled by Bloomberg.

"We are making progress toward our goal of consistent profitability," Chief Executive Officer Richard Anderson said in a statement.

Delta, the world's second-largest airline, is the first of the major U.S. carriers to release results. American Airlines' parent company, AMR Corp., and US Airways Group Inc. also posted profits that beat analysts' estimates. Restraint in adding seats has helped airlines fill planes and increase ticket prices.

The eight biggest U.S. airlines may have a combined quarterly profit of $2.1 billion to $2.4 billion, according to estimates by analysts Michael Linenberg of Deutsche Bank AG and Michael Derchin of CRT Capital Group LLC. Earnings in that range would be the strongest since 2007's second quarter.

Improving demand for business travel, which is typically booked at the last minute and is more profitable than leisure travel, is helping the industry. Atlanta-based Delta said its yield, or the average fare for each mile flown, rose 16 percent.

Delta's share price closed up 11 percent at $12.97. The shares had gained 2.8 percent this year before today.

Third-quarter sales climbed 18 percent to $8.95 billion, led by a recovery in travel to Asia and Europe, Delta said. That exceeded the $8.82 billion average estimate among 10 analysts.

Delta reported $566 million for what it said were one-time costs, including $360 million, mostly non-cash, for extinguishment of debt; $153 million related to getting rid of more than 50 planes at its Comair regional unit; and $53 million in expenses from its 2008 acquisition of Northwest Airlines Corp.

Fourth-quarter seating capacity will increase by 5 percent to 7 percent from a year earlier, Delta said, with more flying to be done by existing aircraft and some jets pulled from temporary storage. That move reverses what Delta has called "very significant and sharp" capacity reductions during the recession.