By Dow Jones Business News, October 22, 2013, 08:45:00 AM EDT
Delta Air Lines Inc.'s ( DAL ) third-quarter earnings rose 31% as the nation's No. 2 carrier by traffic was buoyed by
improved unit revenue and only a modest increase in unit costs.
Delta shares, which were added to the S&P 500 index last month, were up nearly 5.2% to $25.96 in early trading Tuesday
on the New York Stock Exchange, as its results topped Wall Street expectations. Through Monday's close, the stock has
more than doubled this year.
Atlanta-based Delta said it expects to increase its capacity in the current quarter by 1% to 3% compared with a year
ago, and sees an operating margin of 7% to 9%.
Chief Executive Richard Anderson said the latest results reflected progress Delta has made over the past five years,
since it acquired Northwest Airlines. He said the company expects to have a "record" year in 2013 and sees opportunity
to exceed that in 2014. The company foresees "sold" profit in the current quarter.
Looking ahead, President Ed Bastian said, "The revenue environment appears solid through the end of the year,
including strong holiday bookings." He said the company expects its unit revenue -- the amount taken in for each
passenger flown a mile -- to be 2% higher in October, a number that will be lower than desired due to tough comparisons
a year ago due to Hurricane Sandy and because the 16-day government shutdown this month reduced revenue by up to $25
million, he said.
Delta reported a profit of $1.37 billion, or $1.59 a share, up from $1 billion, or $1.23 a share, a year earlier.
Excluding fuel-hedging impacts, fleet restructuring expenses and other items, adjusted per-share earnings in the latest
quarter were $1.41. Revenue increased 5.7% to $10.49 billion. In the year-ago third quarter, Delta recorded items
totaling a $279 million gain
Analysts polled by FactSet expected profit of $1.12 billion and earnings per share of $1.36, excluding items, on
revenue of $10.47 billion.
Passenger unit revenue in the third quarter rose 4%. Delta said its domestic unit revenue rose 7.7% and transatlantic
unit revenue was up 5.6%
Mr. Bastian said the company had particularly strong performance in its Atlanta and New York hubs and in London. In
June, Delta acquired a 49% stake in Virgin Atlantic Airways Ltd., and in September received regulatory approval to
operate a joint venture across the Atlantic with the British carrier. The venture, slated to begin Jan. 1, should
strongly bolster Delta's market position in London.
Delta's third-quarter traffic increased 2.1% while capacity rose 2.6%.
The company's Trainer refinery contributed a profit of $3 million. Though lower crack spreads pressured refinery
results, they also helped reduce Delta's overall fuel expenses.
Write to Susan Carey at Susan.Carey@wsj.com and Tess Stynes at Tess.Stynes@wsj.com
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