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Atlanta-based Delta Air Lines posted a record multi-billion dollar profit for 2013, beating previous forecasts and signaling a solid return to healthy financial footing for the mega-carrier.
Delta’s profit for the year came to $2.7 billion, excluding a one-time accounting gain related to taxes and other items. That was $1.1 billion better than 2012 results, according to the company. The 2013 figure included a fourth quarter profit of $558 million.
“Across the board this was an outstanding year,” said Delta chief executive Richard Anderson in written statement.
Delta’s largest hub, at Atlanta’s Hartsfield-Jackson International Airport, saw a 7 percent increase in unit revenue, said Delta president Ed Bastian. Bastian said the strength of corporate travel drove the increase.
Delta’s stock price has more than doubled from about $14 a year ago. The shares closed at $32.08 Tuesday, up 3.3 percent from the previous close.
Operating revenue for the year grew 3 percent to $37.8 billion, while expenses were roughly flat. Delta said that included a 40 percent increase in revenue from ancillary products — a category that includes baggage fees, upsells to economy comfort and other fees — and the airline plans to pursue even more such “merchandising” efforts in the future.
“Right now we’re working on a lot of research on what customers would like to buy,” said Delta’s chief revenue officer Glen Hauenstein.
Delta benefited from lower fuel costs last year. But the company’s oil refinery, which had an unexpected shutdown for repairs, didn’t do as well. Delta’s Trainer refinery in Pennsylvania posted a $46 million loss in the fourth quarter and a $116 million loss for the year. The refinery will have another loss in the first quarter of this year, but is expected to post a “modest profit” for the full year 2014.
The airline’s overall 2013 fourth quarter results included an unusual accounting gain related to its financial turnaround. The company’s expectations for future profitability led it to record a non-cash gain of $8 billion in the fourth quarter, which reflects the value of tax benefits carried forward from its past years of financial losses.
Looking forward, Delta is increasing its flying by 2 to 3 percent in the first quarter of this year compared to the same period of 2013. And with the record profit, the company plans to pay out more than $500 million in profit sharing to its employees next month.
And the airline plans to continue to replace older 50-seat regional jets with larger jets that are better-liked by customers, more efficient and generate higher margins for the company. Delta is reducing its fleet of 50-seat regional jets from more than 500 in 2009 to fewer than 200 by the end of this year.
