Delta Air fourth-quarter profit rises on rev gains, lower fuel costs
(Reuters) - U.S. carrier Delta Air Lines Inc (DAL.N: Quote) reported a higher-than-expected fourth-quarter profit on Tuesday, aided by lower fuel costs and higher fares.
Delta, now the third-largest U.S. airline behind the newly merged American Airlines Group Inc (AAL.O: Quote) and United Continental Holdings Inc (UAL.N: Quote), said it expected margins to widen in the current period. It forecast an operating margin of 6 percent to 8 percent for the first quarter. Helane Becker, a Cowen & Co airline analyst, estimated a 5.4 percent operating margin for Delta for the first quarter.
Shares rose 4.6 percent to $32.50 in early trading.
Passenger revenue gains were strongest in the United States and Latin America, helped by holiday travel.
Fourth-quarter net income totaled $8.5 billion, or $9.89 a share, including a noncash gain of $8 billion from a tax benefit. A year earlier it had a profit of $7 million, or 1 cent a share.
Excluding items such as the tax benefit, profit was $558 million, or 65 cents a share in the latest period, compared with the average analyst estimate of 63 cents, according to Thomson Reuters I/B/E/S.
Quarterly revenue rose 6 percent to $9.08 billion, while analysts targeted $9.04 billion. Yield, a measure of the average airfare paid per mile flown, rose 4 percent to 17.05 cents.
Operating expenses were up 2 percent, while costs for aircraft fuel and related taxes fell 7 percent.
In the fourth quarter, passenger revenue rose 9 percent in the United States, 18.5 percent in Latin America and 1.9 percent in Europe but fell 1.6 percent in the Pacific region. Continued...