Delta Posts Loss on Higher Fuel Costs
Updated from 8:39 a.m. EDT
Delta Air Lines (DAL) reported a small third-quarter loss due to high fuel costs, but said it is now benefitting from a sharp decline in crude.
"With fuel dropping the way it's dropping, we're somewhat hedged against the economic downturn," said CEO Richard Anderson, on an earnings conference call Wednesday. "We were looking at a $4 billion year-over-year increase in the cost of fuel. Having fuel drop like a rock is a big offset to what happens in the economy. You would rather deal with demand cessation than $150 fuel."
For the third quarter, Delta reported a loss of $26 million, or 7 cents a share, excluding special items. A final tally of analysts surveyed by Thomson Reuters put the per-share estimate at break-even, although the consensus expectation stood at a profit of 1 cent on Tuesday.Revenue rose 9% to $5.7 billion, in line with estimates. With items, the carrier lost $50 million, or 13 cents a share, in the quarter. Delta had been one of the few airlines expected to report a third-quarter profit, albeit a slight one, after excluding items. However, Delta said fuel costs were $800 million higher than a year earlier. Looking ahead, the company expects to "post a modest loss in the fourth quarter, along the lines of what we did in the current quarter," said President Ed Bastian. "Near-term demand remains strong," Bastian said. Domestically, "we're seeing some pressure," he said, but load factors are higher because capacity has been reduced. Internationally, bookings have declined two to four points, though yields are strong, he said.
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