Delta Air Lines reported a smaller quarterly loss Tuesday and said it expected an increase in business passengers to aid results this year.
The carrier, which acquired Northwest Airlines in 2008 to become the world's biggest airline, said it expected growth of revenue per available seat mile each month in 2010 as the economic recovery gains steam.
"What is going to be the most important thing on people's minds right now is the outlook on corporate travel and how quickly it can recover," said Hunter Keay, an analyst with Stifel Nicolaus.
"The question is now whether the recovery is going to be V-shaped or a little bit more protracted, and at this point it's probably going to look a little more drawn out," Keay added.
Airlines have cut jobs and reduced capacity in the past two years as the recession battered business and consumer demand for air travel.
Last week, rivals Continental Airlines and Southwest Airlines posted profits after year-earlier losses and noted that business travel was picking up.
On Tuesday, Delta also said business demand was coming back, with its corporate contract bookings trending up about 10 percent in January compared with the year earlier. Additionally, consolidated passenger unit revenue turned positive this month, it said.
"We have seen tangible evidence of sequential demand improvement which indicates the recovery has begun," President Ed Bastian said.
The company, which is reducing capital spending on new planes, also said airfares were starting to improve, though at a subdued pace, and savings from the merger with Northwest would help as it continues to keep costs down.
"Everyone is waiting to see what happens with the merger and if they are able to create those synergies," said Morningstar analyst Basili Alukos. "If they do, I think you'll see more mergers occur."
EYEING JAPAN AIRLINES
Delta said the addition of Japan Airlines to the SkyTeam alliance, should it materialize, could benefit revenue longer-term.
Delta and its SkyTeam partners have offered USD$1 billion of aid to JAL, which filed for bankruptcy earlier this month. American Airlines boosted its aid offer to JAL to USD$1.4 billion in hopes of keeping it in the oneworld alliance.
Delta said the latest word it had received from JAL as well as the Japanese government indicated there was no interest in an up-front capital investment at the current time.
Delta's fourth-quarter net loss narrowed to USD$25 million, from USD$1.44 billion a year earlier.
Operating revenue rose 1 percent to USD$6.8 billion, while operating expenses fell 12 percent. On a combined basis, which joins results of Delta and Northwest for the fourth quarter and year-earlier period, operating revenue fell 12 percent, with passenger revenue down 13 percent.
