Delta Air Lines net income takes a nosedive

Second-biggest US carrier by passenger traffic says cancellations hit quarterly results and unit revenue dropped and said second-quarter income would fall.

Delta Air Lines delayed or cancelled thousands of flights this month, which will hit second-quarter profit, it said. Red Huber / Orlando Sentinel

Delta said it cancelled about 4,000 flights this month due to severe weather in Atlanta and said it would reduce its second-quarter pre-tax income by US$125 million.

The company said on Wednesday its passenger unit revenue dropped 0.5 per cent in the first quarter ended March 31. Delta’s net income fell 36.3 per cent to $603m, or 82 cents per share, in the quarter, from a year earlier.

On an adjusted basis, the company earned 77 cents per share. Total operating revenue fell 1.1 per cent to $9.15 billion. Analysts on average had expected Delta to earn 75 cents per share, on revenue $9.18bn, according to Reuters.

Delta said it expected forecast passenger unit revenue, a closely watched revenue measure, to increase 1 to 3 per cent in the second quarter, citing healthy demand.

Delta said March marked the first month of positive passenger unit revenue since November 2015, and it expects the measure to remain positive throughout the rest of the year.

Unit revenues – which compare sales with flight capacity – were hurt last year across the industry in the United States due to higher capacity and lower average fares.

“We will keep our full-year capacity growth capped at 1 per cent to support this unit revenue momentum and the company’s return to margin expansion,” the Delta president Glen Hauenstein said.

Up to Tuesday’s close, Delta’s stock had fallen 7.9 per cent, compared with a 1.5 per cent increase in the Dow Jones Transport Average index.

* Reuters

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