Delta Air Lines (NYSE:DAL) announced Monday that it expects second quarter reports to show good profitability, with higher revenue offsetting increased fuel prices. Passenger revenue per available seat is expected to increase 10%, though fuel costs were up by 91 cents to an average of $3.23 a gallon. With fuel prices dropping to near $3 a gallon, Delta expects their third quarter to be even more profitable than the current period. Of course, part of what makes Delta profitable is decreasing seat capacity post-Labor Day, retiring older planes in the off season, allowing the airline to layoff workers. Delta expects a second quarter unrestricted liquidity of $5.6 billion.
As fuel prices continue to plummet, Delta isn’t the only airline looking to cash in as one of their biggest expenses (fuel makes up about one-third of an airline’s costs) is cut. These airlines are all trading in the green today: AMR Corp. (NYSE:AMR), United Continental (NYSE:UAL), US Airways (NYSE:LCC), Alaska Air (NYSE:ALK), and JetBlue Airways (NASDAQ:JBLU). The Nyse Arca Airline Index (XX:XAL) jumped last Thursday after the IEA announced it would release 60 million barrels of crude to offset shortages due to the conflict in Libya. But the next day airline stocks dropped as United Continental Holdings, the parent of United Air Lines and Continental Airlines, forecast second-quarter revenue below Wall Street’s projections. Today’s spike has yet to reach Thursday’s high, though numbers remain an improvement over pre-IEA announcement share prices.
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