Delta soars to record 2Q profits

Delta soars to record 2Q profits

Delta soars to record 2Q profits

The FINANCIAL -- Delta Air Lines posted a record profit for the second quarter, the latest in a string of record-breaking results as the airline strengthened its partnerships, pushed new revenue initiatives and enjoyed the benefits of lower fuel costs.

Delta reported adjusted pre-tax income1 of $1.6 billion for the quarter, an increase of $202 million on a similar basis over the second quarter of 2014. The airline’s adjusted net income was $1 billion, or about $1.27 per diluted share, up 22 percent from the same quarter of 2014.  On a GAAP basis, pre-tax income totaled $2.4 billion and net income totaled $1.5 billion, or $1.83 per share for the quarter, according to Delta Air Lines.

“Delta’s record results have allowed the company to invest in its employees through higher wage rates and profit sharing; improve the experience for our customers through new aircraft and innovative partnerships with global carriers; and uniquely deliver value for our shareholders by accelerating our capital returns while also paying down debt,” said Richard Anderson, Delta’s chief executive officer, in a press release. “We have more work and opportunity ahead of us on all of these fronts as we continue to execute on our long-term plan.”

The company reported “solid progress” with several new revenue initiatives, including its Branded Fares, which increased passenger revenues by $56 million, and an enhanced agreement with American Express, which produced an incremental $60 million in revenue contributing to results.

Despite foreign currency pressure, Delta’s operating revenue for the quarter increased 1 percent. Passenger unit revenues dipped 4.6 percent as yields declined by 3.9 percent.

Delta recently agreed to purchase up to $56 million in preferred shares in its Brazilian partner GOL, and to extend the commercial arrangements with GOL to further strengthen the alliance between the airlines.

Fuel prices provided a significant benefit to the company, with adjusted fuel expense down $463 million compared to the same period last year. On a GAAP basis, also including fuel hedge gains and the impact of the refinery, fuel expense declined by $1.2 billion compared to the second quarter of 2014.

And Delta’s refinery in Trainer, Pa., reported a profit of $90 million, helping to offset nearly $600 million in losses from settled fuel hedges. Over the past four quarters, the refinery has produced a cumulative profit of $300 million.

Delta is the first major airline to report earnings for the second quarter. Starting next week, American Airlines, United Airlines, Southwest Airlines, JetBlue Airways and Alaska Airlines will all report their results.

The industry overall is expected to post strong results for the quarter. Delta has been consistently profitable, on an annual basis, since 2010.