Delta, other airlines post profit turnarounds

The company said its profit would have been nearly three times that, $929 million, were it not for one-time charges to reduce debt, ground some regional jets at subsidiary Comair and lingering expenses from its merger with Northwest Airlines.

Delta President Ed Bastian said the airline sees strong demand through the holidays. Corporate travel has increased and revenue is especially strong in international markets, he said.

Chief Executive Richard Anderson, during an earnings conference call, also expressed confidence that Delta will compete well in Atlanta against Southwest Airlines, which last month announced a deal to buy AirTran Airways, Delta’s chief rival in Atlanta. While the deal joins two leading discounters, Anderson suggested Southwest will have to boost prices to make it pay off.

“The only way to make that merger have the synergies that it’s broadcast to have is by increasing fares and revenues,” he said.

He added that Southwest has a “very different product” from Delta’s, including no first class sections, no assigned seats and a more limited sales distribution system.

“If you want international service” with flights around the world, assigned seats, business class and first class with airport lounges, “that’s the product Delta offers,” he said. A Southwest representative declined to respond.

Delta’s revenue for the quarter rose 18 percent to $9 billion, including a $75 million increase in revenue primarily made up of baggage fees.

"These results show the benefits of our merger" with Northwest Airlines in 2008, Anderson said. But, "we have more work to do to get the business to a place where it is consistently profitable."

Both American and US Airways also swung to profits from year-earlier losses. They posted revenue gains of 14 percent and 17 percent, respectively.

Delta expects to be “solidly profitable” in the fourth quarter, Chief Financial Officer Hank Halter said. It expects flight capacity to be up 5 percent to 7 percent in the fourth quarter from last year, and 2011 capacity to be up 1 percent to 3 percent.

Delta plans to continue reducing its fleet in 2011, removing 20 to 30 airplanes, including 50-seat regional jets, along with DC9-30s and Saab aircraft inherited from Northwest.