Delta Air Lines net profit for the March 2013 quarter was $85 million, or $0.10 per diluted share, excluding special items. This result is a $124 million improvement year-over-year. Including $78 million in special items, Delta's GAAP net income was $7 million, or $0.01 per diluted share. Results include $20 million of profit sharing expense in recognition of Delta employees' contributions to the company's financial performance.
"Our results represent Delta's strongest March quarter financial and operational performance in over a decade and I want to thank Delta people worldwide for all the hard work that went into producing these results for our company. This performance is proof that we are on the right path to making Delta the airline of choice for our shareholders, employees, and customers," said Richard Anderson, Delta's chief executive officer. "With a solid financial foundation and building momentum from initiatives like our LaGuardia expansion, Virgin Atlantic investment and new Terminal 4 at New York-JFK, we are well positioned to generate significant improvements in Delta's profitability going forward."
Delta's operating revenue grew $87 million, or 1.0%, in the March 2013 quarter compared to the March 2012 quarter. Load factor increased to 81.2%, with traffic down 0.6% on a 2.5% decrease in capacity.
Passenger revenue increased 1.4%, or $107 million, compared to the prior year period. Passenger unit revenue (PRASM) increased 4.1%, driven by a 2.1% improvement in yield. Cargo revenue decreased 2.4%, or $6 million, on declining freight yields. Other revenue decreased 1.4%, or $14 million, as a result of lower third-party maintenance revenue.
"Our March quarter unit revenues grew 4 percent, showing that the investments we have made in operations, products and service, combined with our capacity discipline, have built a solid revenue-producing foundation," said Ed Bastian, Delta's president. "We are taking actions to mitigate the decline in close-in demand we saw in the last part of March, and we expect the impact of the sequester, combined with a softening of leisure demand, to result in a 2 – 3 percent decline in April's unit revenues. However, a key benefit from a consolidated industry is that we now see a much stronger correlation between revenue and fuel; so while we are seeing some revenue softness, we are also benefitting from lower fuel costs, allowing us to continue our path of margin expansion even in a sluggish economic environment."
Capital expenditures during the March 2013 quarter were $650 million, including $500 million in fleet investments and $47 million for two sets of slots at London's Heathrow airport. Capital expenditures included 21 aircraft purchased off lease as part of Delta's debt reduction efforts. During the quarter, Delta's debt maturities and capital leases were $382 million.
Fuel expense for the March quarter declined $78 million year-over-year, excluding mark to market adjustments, as a result of lower fuel prices and consumption. Delta's average fuel price was $3.24 per gallon for the March quarter, which includes 6 cents per gallon in settled hedge gains. For the March quarter, operations at the Trainer refinery produced a $22 million loss, driven by supply disruptions related to Superstorm Sandy and a short-term outage in a gasoline production unit, which slowed production during the quarter.
Excluding fuel, total operating expense in the quarter increased year-over-year by $198 million as the impact of operational, service and employee investments was partially offset by savings from Delta's structural cost initiatives.
Consolidated unit cost excluding fuel expense, profit sharing and special items (CASM-Ex3), was 5.0% higher in the March 2013 quarter on a year-over-year basis, driven by the impact of capacity reductions, wage increases, and operational and service investments. GAAP consolidated CASM increased 5.8 percent.
"Our March quarter non-fuel unit cost growth was lower than expected, as the benefits of our structural cost initiatives limited the cost growth associated with investments in our people, operations, and service," said Paul Jacobson, Delta's chief financial officer. "We should see our cost pressures lessen significantly in the second half of the year, as the benefits of our structural cost initiatives accelerate and we lap the impact of prior year investments."
Delta reports Q1 results
