Delta 1Q Profit Down 36%; Recent Disruption to Cost $125 Million

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Delta Air Lines reported a first-quarter 2017 net profit of $603 million, down 36% from net income of $946 million in the prior-year period, as fuel prices rose sharply year-over-year.

The Atlanta-based carrier said it expects to take a $125 million hit in reduced pre-tax income in the second quarter from the 4,000 flight cancellations resulting from severe thunderstorms April 5 and the subsequent problems in operational recovery over several days related to crew displacement.

“The storms that hit us [April 5] had an impact that, in my 20 years at the airline, I’ve never seen,” Delta CEO Ed Bastian told analysts and reporters.

“There was a virtual shutdown of Atlanta for the better part of a day … We had crews that were diverted. We had crew rotations that were broken … We apologize and certainly take responsibility for making this better in the future … We were literally running the airline hour-by-hour in terms of where crews were and getting them back to where they needed to be.”

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He added, “When we have snowstorms, we typically get out of the way. We were not able to get out of the way of this … The IT worked as designed. It got overwhelmed by the volume [of out-of-place crew]. The equipment worked throughout.”

Delta said its first-quarter adjusted fuel expense, which takes into account fuel hedging, increased $327 million compared to the same period in 2016, citing 52% higher market prices for fuel.

Delta’s first-quarter revenue was down 1% year-over-year to $9.1 billion, while expenses increased 5% to $8.1 billion. Operating profit was $1.1 billion, down 32% from operating income $1.5 billion in the 2016 March quarter.

Delta’s consolidated first-quarter traffic rose 0.5% year-over-year to 48 billion RPMs on an 0.5% decrease in capacity to 57.9 billon ASMs, producing a load factor of 82.9%, down 0.8 point. Passenger yield fell 1.4% to 16.3 cents.

Source: atwonline.com

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