Delta Air Lines Q1 net income up 27%

Apr 14, 2016, 9:59 AM EDT
(Source: John Marotta/flickr)
(Source: John Marotta/flickr)

Delta Air Lines' Q1 net income increased 27%, thanks to low jet fuel prices.

Reuters reports:

Delta Air Lines Inc (DAL.N) on Thursday reported a first-quarter profit above analysts' expectations and forecast a smaller decline in passenger unit revenue for the spring, promising to change its fall flight capacity if necessary to improve the measure. The Atlanta-based airline earned $946 million in the first quarter. On an adjusted basis, profit nearly tripled to $1.03 billion, or $1.32 per diluted share. Analysts on average estimated Delta would earn about $1 billion, or $1.30 per diluted share, according to Thomson Reuters I/B/E/S. Delta also said its passenger revenue as measured against flight capacity would decline between 2.5 percent and 4.5 percent in the second quarter, compared with a 4.6 percent drop in the first quarter.

A.P. writes:

Delta is the first major U.S. airline to report first-quarter earnings. The airlines have been setting profit records thanks to falling prices for jet fuel.

There are, however, signs of turbulence ahead for the carriers.

— Oil prices have soared nearly 60 percent since their lows in mid-February, although they are still about 60 percent below their June 2014 peak.

— Labor costs are rising — workers who made concessions during the troubled 2000s want raises and profit sharing.

— Airfares have dropped, especially on last-minute business-travel tickets, as airlines add flights.

— And terror attacks in Europe and the Zika virus in the Western hemisphere could weaken travel demand. Delta said last month's bombings that shut down the Brussels airport cost it $5 million in revenue.

Atlanta-based Delta Air Lines Inc., the world's second-biggest carrier by traffic behind American Airlines, earned $200 million more than it did in the first quarter of last year.

USA Today notes:

Ed Bastian, Delta's incoming CEO, said the results reflected “tremendous momentum,” including 49 days without canceling a flight. The adjusted fuel expense was 40% cheaper than a year earlier, at $1.45 billion for the quarter. “With these results, the Delta people have proven again that they are the very best in the industry,” Bastian said. “We will continue to be disciplined with our business in the face of volatile fuel prices, strengthen our foundation, and prove our position as the airline that consistently delivers top results for our employees, our owners and the customers and communities we serve.”