Delta Posts Wider Loss

Updated from Aug. 9

Delta Air Lines(DALRQ Quote - Cramer on DALRQ - Stock Picks) said Wednesday that unit revenue increased by 17% in the quarter ended June 30, while net income before reorganization costs was $175 million.

Including reorganization costs and other special items, the third-largest airline reported a loss of $2.2 billion, compared with a loss of $382 million in the second quarter of 2005.

"Despite the more than $300 million impact of higher fuel prices, Delta produced its first quarterly net profit, excluding reorganization or special items, since December 2000," said Edward Bastian, the carrier's chief financial officer, in a prepared statement.

The company said it is benefiting from the restructuring of its route network, as well as from high demand and a reduced supply of seats. Delta was the last of the 10 largest airlines to report second-quarter earnings. Every one of them, with the exception of JetBlue(JBLU Quote - Cramer on JBLU - Stock Picks), reported a sharp improvement over the same quarter a year earlier.

Calyon Securities analyst Ray Neidl, in a report issued Wednesday, said he expects the strong results to continue into the third quarter and for the year.

"If [present] trends continue, even with fuel prices holding at over $70 a barrel, we believe the industry will produce almost $4 billion in profits in 2007," Neidl wrote. "We believe cost and capacity cuts are finally bringing results to the loss-plagued legacy carriers."

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