Higher fares help boost Delta profit

By Kelly Yamanouchi

The Atlanta Journal-Constitution

Delta Air Lines posted a net profit of $854 million in 2011, as it brought in more revenue to cover increased fuel costs while trimming flights and its work force.

Enlarge photo

Charles Krupa, AP A Delta Airlines plane taxis past a gate at Logan Airport in Boston Tuesday, Jan. 24, 2012. Delta Air Lines said Wednesday, Jan. 25, 2012, it earned $425 million in the fourth-quarter as it raised prices in the critical holiday season and the airline reduced flying to keep costs low.

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A key source of increased revenue in the airline industry was higher fares. Atlanta-based Delta and other airlines increased prices throughout 2011, and the trend is continuing into 2012.

Despite persistently high fuel costs, Delta Chief Executive Richard Anderson told analysts on a conference call that “2012 is setting up as another good year for Delta.”

“We are committed to permanently fixing our business model,” he said.

Delta’s 2011 earnings amounted to $1.01 per share, compared with 70 cents a share in 2010, when the net profit was $593 million. Excluding special items, Delta said its 2011 profit was $1.2 billion, down from $1.4 billion in 2010.

The full-year results included a $425 million profit for the fourth quarter, up from $19 million a year earlier. The company said it would have had a $379 million profit excluding special items in the fourth quarter of 2011, making it the most profitable December quarter in its history. Special charges for the quarter include gains on fuel contracts, a gain from a swap of flying rights with US Airways in New York and Washington, D.C., charges for grounded aircraft and an $80 million charge for severance and other items.

Delta reported fourth-quarter increases of 8 percent in passenger revenue, 8 percent in cargo revenue and 4 percent in other revenue.President Ed Bastian said Delta’s Atlanta hub was among those that produced particularly strong increases in unit revenue.

Excluding fuel, operating expense for the quarter was flat.

Delta laid off about 200 administrative employees late last year after offering buyouts and early retirement that more than 2,000 employees signed up for. The company also reported progress in its efforts to reduce its debt.

Delta continues to trim flights and says its flight capacity will be down 3 percent to 5 percent for the first quarter compared with a year ago.