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Delta posts $593 million profit for 2010
By: ajc.comPosted On: 01/18/2011 3:31 P
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Delta Air Lines finished 2010 with its first annual profit in three years, but executives warned that rising fuel costs are pressuring them to raise fares to keep pace with costs.
Delta Air Lines finished 2010 with its first annual profit in three years, but executives warned that rising fuel costs are pressuring them to raise fares to keep pace with costs.
The airline also said the storm that hit its Atlanta hub last week, prompting thousands of cancellations, will cost Delta $30 million, including a $40 million hit to revenue offset by $10 million in reduced flight costs. Chief Operating Officer Steve Gorman said the airline is investing in systems that will enable it to rebook customers more effectively.
Delta reported a profit of $19 million for the fourth quarter and $593 million for all of 2010, marking the company’s first fourth-quarter profit since 2000 and first annual profit since 2007.
The quarterly results, equivalent to 2 cents a share, compared to a loss of $25 million, or 3 cents a share, a year earlier.
Excluding special items, Delta said it would have had a quarterly profit of $158 million, or 19 cents per share. The items included $88 million in expenses from the Northwest merger, a $31 million cost for refinancing and reducing debt, and $20 million in costs to consolidate its Cincinnati hub and move all operations into a single concourse.
Fourth quarter revenue rose 14 percent to $7.8 billion. The airline reported $885 million in “other” net revenue, a 14 percent increase, in part due to checked baggage fees.
Delta’s annual profit amounted to 70 cents per share and compared with a 2009 loss of $1.2 billion, or $1.50 a share. Excluding special items, the company said it would have had a $1.4 billion profit for 2010.
Delta’s chief financial officer, Hank Halter, told employees in a memo that fuel at today’s prices could add an extra $1 billion in costs this year.
Delta expects its flight capacity to rise 1 percent to 3 percent for 2011, but Chief Executive Officer Richard Anderson added, “We are watching fuel prices and are prepared to adjust capacity.” Some analysts questioned Delta’s plans for growth.
President Ed Bastian said the company is able to maintain profits with fare increases and fees from baggage and other items, which he said “will provide a more long-term, revenue-based solution to addressing the high fuel environment.”
He said airlines have increased fares three times in the last month and Delta led a new $5 to $10 fare increase over the weekend.
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