Analysts welcomed the results. Standard & Poor’s analyst Jim Corridore in a message to investors Tuesday noted Delta’s strong unit revenue, along with its “improving balance sheet and focus on returning cash to shareholders.”
The net income reflected an increase in the value of Delta’s fuel contracts, as well as expenditures for the airline’s aircraft replacements as it retires inefficient 50-seat regional jets. Without counting those “special items,” Delta said its net profit would total $1.2 billion for the September quarter.
The profit came on $10.5 billion in operating revenue, up 6 percent from a year ago. Cargo revenue, however, was down amid weak global freight demand.
Delta’s operating expense for the quarter amounted to nearly $9 billion, up 4 percent from a year ago. The financial results included a $40 million benefit from its new ownership stake in British carrier Virgin Atlantic.
And Delta also reported the first profit from the oil refinery it acquired last year.
Getting the oil refinery up and running with successful results has been more difficult and costly than the airline expected. Delta said the Trainer, Pa., refinery’s operations produced a $3 million profit in the quarter, though results were pressured by a lower jet fuel premiums. Delta chief executive Richard Anderson said the company’s next step is to improve the refinery’s profitability.
As Delta establishes firm financial footing, the company is using its cash to pay down debt and reward shareholders.
The quarterly results also reflected $100 million in share buybacks and $51 million in dividend payments — with September marking its first dividend payout in a decade.
Looking forward, Delta plans to increase its flying by 1 to 3 percent in the fourth quarter, with a slightly bigger increase in international flying. The company expects a record profit for the year.