Delta has $198 million profit, says 2,000 took buyouts

Delta Air Lines reported a $198 million profit for the second quarter, but its top executive says the carrier must still shrink to adjust to high fuel costs and the slow economic recovery.

“We will resize the airline,” Chief Executive Richard Anderson said during a conference call with analysts Wednesday to discuss second quarter earnings. “We are determined to fix the business.”

The airline said it may cut flight capacity this fall more than originally planned, with reductions of 4 to 5 percent compared with the same period last year. Cuts for the fourth quarter amount to a 20 percent reduction from the busy summer schedule.

The quarterly profit, which amounted to 23 cents a share, was down 58 percent from the same quarter last year. It compared with a profit of $467 million profit, or 55 cents a share, a year earlier.

Atlanta-based Delta said employee buyouts and early retirements offered in June will help to reduce costs. The airline has about 80,000 employees worldwide, with about 27,000 in Georgia.

About 2,000 accepted the buyouts and will leave by the end of the year, Delta said. Most are front-line employees.

The company does not plan any furloughs among front-line workers but is still considering plans for other employees. Exit programs cost the company about $80 million in severance and related costs in the second quarter.

Anderson said Delta’s cost-trimming allowed it to report a profit despite a $1 billion increase in fuel expenses.

Facilities consolidation and airplane retirements cost $64 million in the second quarter. Delta also refinanced $2.6 billion of corporate credit lines and took a $13 million charge for extinguishing debt.

Excluding those special items, as well as severance charges and $11 million in losses on fuel hedges, Delta said it had a profit of $366 million, or 43 cents a share.

Revenue totaled $9.2 billion, up 12 percent. Operating expense was $8.7 billion, up 19 percent. Delta said it expects to be “solidly profitable” in the third quarter.

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