Delta, US Airways report strong earnings

Posted: July 26, 2013

Shares of Delta Air Lines and US Airways Group rose Wednesday after the airlines reported second-quarter earnings that exceeded analysts' estimates, on lower jet fuel costs and improved passenger demand.

Delta shares closed up 1.71 percent to $20.80, while US Airways added 2.49 percent to $18.50.

Saying this would be its last earnings call as a stand-alone company before the merger with American Airlines, US Airways president Scott Kirby noted, "We had a great run here at US Airways."

Philadelphia's dominant carrier, with 437 daily flights, reported a $287 million second-quarter profit, or $1.40 a share, compared with $306 million, or $1.54 a year earlier. Revenue grew 3 percent to $3.87 billion. Fuel costs were down 3.8 percent.

Excluding special items, US Airways posted a profit of $1.58 a share, exceeding the $1.52 expected by analysts.

The Tempe, Ariz., carrier said its merger with American was on track to close in September.

"The teams at American and US Airways are working extraordinarily well together," said CEO Doug Parker, who will lead the combined airline, which will be called American.

Delta, which bought the Trainer refinery outside Philadelphia last year, said fuel expenses were down 21 percent in the quarter. The former ConocoPhillips refinery run by Delta subsidiary Monroe Energy L.L.C. reported a $51 million quarterly operating loss, due largely to a spike in the price of Renewable Identification Number (RIN) credits, creating upward pressure on fuel prices.

RINs are required to comply with the Environmental Protection Agency's Renewable Fuel Standard, which impacts gasoline and diesel production, said Delta chief financial officer Paul Jacobson.

Without those costs, the refinery would have broken even, the Atlanta airline said.

"We are working to mitigate this exposure on multiple fronts, including commercially and through Washington lobbying efforts," said Jacobson, noting the refinery planned to receive from 50,000 to 75,000 barrels a day of Bakken crude in lieu of the more expensive West African grades.

"Operations at the Trainer refinery are going well," said Delta CEO Richard Anderson. "Our objective in purchasing the refinery was to reduce jet fuel costs for Delta, and the Trainer strategy is playing a role in the fuel savings we'll see this year."

US Airways and Delta said corporate travel continued to be strong.

"We've gotten off to a strong start to the summer season and had record revenue performance over the July Fourth weekend," said Delta president Ed Bastian.

Delta's net income was $685 million, or 80 cents a share in the latest quarter, compared with a loss of $168 million, or 20 cents, a year earlier. Excluding special items, profit was 98 cents a share, topping analysts' average estimate of 95 cents. Delta's quarterly revenue fell $25 million to $9.71 billion.

"We expect 2013 will be one of Delta's most profitable years ever," Anderson said.


Contact Linda Loyd at 215-854-2831 or lloyd@phillynews.com.

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