Delta Posts $467M Profit in 2nd Quarter

Delta Air Lines Inc. reported its largest quarterly profit in a decade on
Monday.


Delta

The world’s
largest airline said its second-quarter net income was $467 million, or 55
cents per share. That reversed a year-ago loss of $257 million, or 31 cents a
share, when the airline industry was still reeling from the recession. Chief Executive Richard Anderson described the revenue environment as “good, but not yet great.”

Delta said it
expects to be solidly profitable for the year. And it doesn’t expect to
increase capacity much this year or in 2011, signs of a cautious approach with
the strength of the U.S. economic recovery in question.

Still, the airline, based in Atlanta, is in much better shape
than it was just a year ago.

“The
business is performing well and we still have significant opportunity for
improvement ahead,” Anderson said during a conference call with analysts
and reporters.

Delta expects
to report double-digit year-over-year unit revenue gains for the September
quarter.

Several major
carriers are expected to post profits in the days ahead. Continued fare sales
are good for consumers, but not for investors who want airlines to charge more
for tickets while remaining lean.

Analysts say
that while airlines have raised ticket prices since the recession ended, they
still have room to grow.

The parent of
United Airlines will report its results on Tuesday, followed by US Airways
Group Inc. and the parents of American Airlines and AirTran Airways on
Wednesday and Continental Airlines Inc., Alaska Air Group Inc. and JetBlue
Airways Corp. on Thursday. Southwest Airlines Co. reports its second-quarter
results on July 29.

In the latest
quarter, Delta’s passenger unit revenue increased 19.4 percent, driven by
higher yields and occupancy. Cargo revenue increased 22 percent. Passenger unit
revenue is calculated by dividing passenger revenue by available seat miles,
which are the available seats an airline offers times the miles flown.
Passenger yield is the measure of the average fare paid per mile, per
passenger, which is calculated by dividing passenger revenue by revenue
passenger miles.

Delta said its
latest results included $90 million in profit sharing expense.

The last time
Delta reported a quarterly profit close to what it reported in the latest
quarter was in the second quarter of 2000, when it posted net income of $376
million. Today, however, Delta is a much larger airline, having gobbled up
Northwest Airlines in 2008.

The total
number of international passengers rose 6 percent in the first five months of
the year, according to the International Air Transport Association. Traffic at
the front of the plane — the most expensive seats in business and first class
— improved at an even faster clip.