Will Delta Be Grounded By These Quarterly Results?

Delta’s (NYSE:DAL) fourth-quarter profit was almost completely offset by damages caused by Superstorm Sandy and additional charges. For the three-month period, the airline reported a profit of $7 million, or one cent per share, a decrease from $425 million, or 51 cents per share, in the year-ago quarter. Excluding the special items, Delta said on Tuesday it would have earned $238 million, or 28 cents per share.

However, with revenue increasing by 2 percent to $8.6 billion, the company’s revenue and adjusted profit beat the forecasts of analysts polled by FactSet.

Unfortunately, revenue was negatively impacted as well. Damages from Superstorm Sandy, which hit the East Coast at the end of October, pushed down revenue by $75 million; the storm hindered the re-opening of Delta’s new oil refinery, causing a $63 million loss at the facility.

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Labor and fuel costs both contributed to the lowered earnings, but the carrier said in its earnings press release that it plans to cut seating capacity by as much as 4 percent to lower those expenses. As Bloomberg reported, the proposed measures will help the second-largest carrier to “maintain pricing power” in the sluggish economy ” because capacity reductions usually allow airlines to raise fares and lower costs…

Delta executives found the results positive. “Our investments in Delta’s network, products and operations, combined with our capacity discipline, have produced unit revenue growth that has outpaced the industry for 21 consecutive months,” said President Ed Bastian. “We have built strong revenue momentum going into the year with our customer-focused initiatives, corporate share gains, and capacity actions. As a result, we project a 4-6 percent year over year increase in March quarter unit revenues.”

Shares opened slightly down Tuesday morning, and were trading at $13.55 just after 9:30 a.m. Eastern Standard Time.

The only other airline to have reported four-quarter results so far is American Airlines’ parent company AMR (AAMRQ.PK). For the quarter, the company said its loss narrowed to $88 million because of lower labor and airline-leasing costs.

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