Profit and revenue jump at Delta

By Kelly Yamanouchi

The Atlanta Journal-Constitution

Delta Air Lines posted a $467 million profit for the second quarter, and the carrier expects the black ink to continue as business travel slowly recovers.

The profit compared to a loss of $257 million a year earlier. Excluding one-time charges related partly to Delta’s merger with Northwest Airlines, the profit was $549 million.

Executives said it was the best quarterly result in 10 years. They also said they expect the Atlanta-based airline to be “solidly profitable” in the current quarter and to post a full-year profit, the company’s first since 2007.

While ridership rose 1.7 percent in the quarter, seat capacity fell slightly. The result was more pricing power and a 19 percent jump in revenue per seat-mile.

Delta set aside $90 million for profit sharing in the quarter. The money will be part of a payout early next year if targets are met. Delta has about 25,000 workers based at its Atlanta headquarters and hub.

The quarterly result translated to 55 cents a share including charges, up from a loss of 31 cents a year earlier. The charges included $46 million in merger expenses and $36 million related to aircraft retirements as the airline trims its regional jet fleet.

Revenue jumped 17 percent, to $8.2 billion. That included a 3 percent increase in “other” revenue, primarily due to higher baggage fees. Operating expense rose 5 percent to $7.3 billion, including higher fuel costs and profit sharing.

Delta President Ed Bastian said there’s “definitely room for improvement,” and added that unit revenue -- the amount generated per seat -- is still below 2008 levels.

Delta forecast an operating margin of 10 percent to 12 percent for the third quarter, which fell short of some investors’ expectations. Shares fell about 2.9 percent.

Delta expects capacity to rise a little over 1 percent for the full year, and 1 to 3 percent in 2011. That follows cutbacks as the recession took hold.

Separately, top labor executive Mike Campbell said Delta expects union representation elections, a byproduct of the Northwest merger, to be completed by the end of the year. If flight attendants and ground workers unionize, he said, “I don’t think it’s going to have a material impact on labor costs.”