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Delta Air records $85m net profit in 2013 first quarter

DeltaDelta Air Lines has reported a net profit of $85 million for the first quarter of 2013, a statement released in Accra by Delta said.

It said the airline’s operating revenue grew by $87 million, or 1.0 percent, during the period, compared to that of the first quarter of 2012.

Passenger revenue increased 1.4 percent, or $107 million, compared to the prior year period.  Passenger unit revenue (PRASM) increased 4.1 percent, driven by a 2.1 percent improvement in yield while Cargo revenue decreased 2.4 percent, or $6 million, on declining freight yields.

Other revenue decreased 1.4 percent, or $14 million, as a result of lower third-party maintenance revenue.

Ed Bastian, Delta’s president noted “Our March quarter unit revenues grew by 4 percent; showing that the investments we have made in operations, products and service, combined with our capacity discipline, have built a solid revenue-producing foundation.”

“However, a key benefit from a consolidated industry is that we now see a much stronger correlation between revenue and fuel; so while we are seeing some revenue softness, we are also benefiting from lower fuel costs, allowing us to continue our path of margin expansion even in a sluggish economic environment,” he added.

Cash from operations during the first quarter of 2013 was $1.1 billion, driven by the seasonal increase in advanced ticket sales and March quarter profitability.  The company generated $457 million of free cash flow.

Capital expenditures during the quarter under review were $650 million, including $500 million in fleet investments and $47 million for two sets of slots at London’s Heathrow airport. Capital expenditures included 21 aircraft purchased off lease, as part of Delta’s debt reduction efforts.  During the quarter, Delta’s debt maturities and capital leases were $382 million.

Delta ended the quarter with adjusted net debt of just under $11.0 billion and the company has now achieved a $6 billion net debt reduction since 2009.  This debt reduction strategy produced a $50 million year-over-year reduction in interest expense in the March quarter.

As of March 31, 2013, Delta had $5.4 billion in unrestricted liquidity, including $3.6 billion in cash and short-term investments and $1.8 billion in undrawn revolving credit facilities.

Fuel expense for the March quarter declined $78 million year-over-year, excluding mark to market adjustments, as a result of lower fuel prices and consumption. Delta’s average fuel price was $3.24 per gallon for the March quarter, which includes 6 cents per gallon in settled hedge gains.

Paul Jacobson, Delta’s chief financial officer stated “Our March quarter non-fuel unit cost growth was lower than expected, as the benefits of our structural cost initiatives limited the cost growth associated with investments in our people, operations, and service. We should see our cost pressures lessen significantly in the second half of the year, as the benefits of our structural cost initiatives accelerate and we lap the impact of prior year investments.”

Source: GNA

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