One-time costs push Delta's 3Q profit lower; adjusted earnings narrowly beat forecasts

Delta Air Lines Inc. said Thursday that third-quarter profit fell 74 percent on one-time costs such as retiring older planes, although the results excluding those items beat expectations.

Revenue rose 7 percent, but higher fuel and labor costs pushed expenses higher too.

Delta is the first U.S. airline to report third-quarter figures, and Wall Street is looking for strong results covering the last part of the peak summer-travel season. Many planes were full, as airlines continued to hold down the number of flights, which also tends to push fares higher. Passengers paid 2 percent more per mile.

The company's president, Ed Bastian, said the revenue outlook for the October-through-December fourth quarter looks solid. He said the company expects good revenue growth and higher profit margins.

The best chance for increased profit margins comes in the international flying, Bastian said. Delta is reworking its network of flights to Asia and trimming planned growth on routes to Europe, where expansion by many foreign airlines has cut into profitability.

The Atlanta-based airline said that net income fell to $357 million from $1.37 billion a year earlier. Adjusted for one-time costs, profit was $1.20 per share. Analysts surveyed by FactSet expected $1.18.

Revenue rose 7 percent to $11.18 billion, topping analysts' forecast of $11.12 billion.

But fuel, the airline's biggest single expense, jumped 29 percent to $2.95 billion. Delta recorded $347 million in charges for adjustments to fuel-hedging — those are contracts to protect against big spikes in fuel prices, but they can backfire if oil prices fall.

Labor, Delta's second-biggest cost, rose 5 percent to $2.07 billion. That doesn't include a 54 percent increase in profit-sharing, to $384 million.

Passengers had little elbow room over the summer. The average flight was 86.4 percent full, up from 86.0 percent a year earlier. Passengers flew 4 percent more miles.

Delta's shares fell $1.13, or 3.5 percent, to $31.25 in trading an hour before the opening bell. At Wednesday's closing price, they had gained 18 percent for the year, easily beating the 1 percent increase in the Standard & Poor's 500 index.