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Delta 2Q profit rises 17 percent

Published on NewsOK Modified: July 23, 2014 at 12:25 pm •  Published: July 23, 2014
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ATLANTA (AP) — Delta Air Lines Inc. said Wednesday that second-quarter earnings rose 17 percent, topping analysts' expectations, as passengers flew more miles at higher average fares and fuel spending declined.

The results from Delta, the world's third-biggest airline company, produced a strong opening to the industry's results for the busy April-to-June quarter. American and United are scheduled to report second-quarter figures on Thursday, and analysts expect the biggest U.S. carriers to post large profits.

Delta said it benefited from gains in corporate contracts and domestic traffic. Like other airlines, Delta has been adding flights cautiously and instead is cramming more passengers on each plane. The average flight was 86.3 percent full, a figure that would have seemed impossible not long ago.

By limiting seats or capacity, airlines can keep fares high. CEO Richard Anderson said Delta would continue its "disciplined approach" to adding new flights.

"This discipline continues to be a key driver of our success, as we will post record results for 2014," Anderson said on a conference call with analysts. "We see a good demand environment, combined with modest capacity increases that will result in solid (revenue) growth."

The average fare per mile climbed 3.8 percent, and Delta also collected more from what it calls merchandising, such as charging extra fees for a roomier seat and for priority boarding.

The company's operating margin climbed to 15.1 percent, and it predicted margins of 15 percent to 17 percent in the third quarter.

For the third quarter, however, Delta predicted slower growth in so-called unit revenue — the amount of money taken in for every seat flown one mile. That figure is closely watched in the airline business, and it jumped 5.6 percent in the June quarter. Delta predicted an increase of between 2 percent and 4 percent for the July-to-September period, compared with the same months in 2013.

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