Delta Air Line Starts 2016 With Momentum, Posts $1.56bn Q1 Profit
Ed Bastian, Delta’s incoming Chief Executive Officer |
Delta Air Line has announced a $1.56 billion profit for the first
quarter 2016. The financial result is an increase of $966 million compared to
the same period in 2015. The airline posted an adjusted net income of $1.0
billion or $1.32 per diluted share.
Ed Bastian, Delta’s incoming Chief Executive Officer,
said; “We have started 2016 with tremendous momentum, generating over $1.5
billion in adjusted pre-tax income, delivering industry-leading operations
including 49 days of perfect mainline completion factor for our customers, and
reaching our goal of becoming an investment grade company. With these
results, the Delta people have proven again that they are the very best in the
industry.” He assured further that: “We will continue to be disciplined with
our business in the face of volatile fuel prices, strengthen our foundation,
and prove our position as the airline that consistently delivers top results
for our employees, our owners and the customers and communities we serve.”
In spite of this impressive performance, Delta’s operating
revenue for Q1 2016 decreased by 1.5%, or $137 million, driven by $125 million
in foreign currency pressures and a $5 million impact from the recent events in
Brussels. Passenger unit revenues declined 4.6 percent, including 2 points of
impact from foreign currency, on a 2.7% increase in capacity.
The airline’s incoming president, Glen Hauenstein, noted that: “The
momentum with our commercial initiatives, including corporate share gains,
Branded Fares, and our partnership with American Express, allowed us to
maintain our top line performance in the March quarter despite 40 percent lower
market fuel prices and $125 million of pressure from foreign currency,’ adding
that, “We are forecasting a unit revenue decline of 2.5 – 4.5 percent for the
June quarter. While this is an improvement over our March quarter
performance, we are focused on getting unit revenues back to a positive
trajectory and we will make adjustments to our fall capacity levels if we are
not making sufficient progress over the coming months.”
As part of factors that contributed to this growth, the airline
said adjusted fuel expense declined $1.45 billion compared to the same period
in 2015, on 40 percent lower market fuel prices. For the quarter, the
refinery produced a loss of $28 million. Settled hedge losses were $118
million. CASM-Ex3 including profit sharing, increased 4.5 percent for the March
2016 quarter compared to the prior year period, with foreign exchange and the
benefits of Delta’s domestic refleeting and other cost initiatives offsetting
the company’s investments in its products, operations and employees. Half of
the increase was attributable to $136 million of higher profit sharing expense.
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