Delta Profit Dips On Hurricane Irma Effect

October 11, 2017

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Delta Air Lines reported a 6 percent drop in third quarter net profit as it took a USD$140 million revenue hit from the effects of Hurricane Irma in September.

Net profit in the quarter to end September was $1.18 billion, down from $1.26 billion in the same period of last year, as operating revenue increased by 5.5 percent to $11.06 billion. Operating expenses, however, were up 8.3 percent to $9.22 billion as staff and fuel costs rose.

The resulting operating income of $1.84 billion was down from 3Q16’s $1.97 billion, a 6.6 percent drop.

The biggest cost rises were from staff expenses of $2.72 billion, up 10.2 percent, with profit sharing increasing by 4.8 percent, and fuel up 6.8 percent at $1.52 billion.

Adjusted fuel expenses increased $230 million compared to 2016 as market fuel prices increased throughout the quarter. Delta paid an average of $1.68 per gallon of fuel, adjusted for the benefit received from its Trainer oil refinery.

Passenger traffic in revenue passenger miles (RPM) was up 3.4 percent on an ASM (available seat miles) capacity increase of 1.6 percent. The resulting load factor improved by 1.5 percentage points to 86.9 percent.

Unit revenue (RASM) was up 3.8 percent to 15.76 cents, but unit costs (CASM) also rose, by 6.6 percent to 13.14 cents.

“Three of four entities reported positive unit revenues, and we see continued opportunity in business yields,” Delta’s president Glen Hauenstein said.

Looking forward, Delta expects its passenger unit revenue to increase by between 2 and 4 percent in the fourth quarter, and CASM unit costs to recede by up to 1 percent. Operating margin was forecast to be in the 11 to 13 percent range.

“Having just completed the busiest summer travel season in our history, we have good momentum, a determined team and a solid pipeline of initiatives to grow earnings and margins,” the airline’s chief executive Ed Bastian said.