Delta Air Lines (NYSE:DAL) posted an operating loss in the first quarter but said it expects to make a profit in the current period despite rising fuel costs.
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The company has been cutting back on unprofitable routes and trying to minimize costs and reduce capacity in an effort to offset rising fuel costs that have pressured U.S. airlines over the last few years.
The Atlanta carrier reported net income of $124 million, or 15 cents a share, for the latest period, compared with a year-earlier loss of $318 million, or 38 cents. Excluding a $163 million one-time gain related to fuel hedges and the exchange of slots at New York and Washington, D.C. airports, the No. 2 U.S. airline said it lost 5 cents, matching average analyst estimates in a Thomson Reuters poll.
Revenue climbed 9% to $8.4 billion from $7.7 billion, beating the Street’s view of $8.36 billion, led by a 14% improvement in passenger unit revenues.
“Our March quarter improvement in results and operations are further evidence of the building momentum at Delta,” the company’s chief executive, Richard Anderson, said in a statement. “We expect the June quarter and full year will be not only solidly profitable but also a significant improvement over last year, despite higher fuel prices."
Delta’s fuel expense rose by $250 million, a reflection of a 14% increase in fuel price that was offset by $45 million of fuel hedge gains and reduced consumption.