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Originally Posted by Harry Cane
Speaking of aviation, Delta releases quarterly numbers today. Should be pretty good.
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Very good actually!
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Delta reports $1.8 billion profit
Earnings results first since Atlanta-based airline emerged from bankruptcy
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 07/18/07
Delta Air Lines reported a second quarter net profit of $1.8 billion, but the results were pumped up by big accounting adjustments related to its emergence from a Chapter 11 restructuring.
Excluding those gains, the Atlanta-based airline said its profit was $274 million, or 70 cents a share, easily exceeding Wall Street forecasts. The results reflect improved industry conditions this year that have lifted the bottom lines of most carriers, as well as the deep cost-cutting and re-working of Delta's flight network and other pieces of its business.
Delta's operating margin, a profit measure that excludes taxes, most accounting charges and other one-time items, was a healthy 9.8 percent.
Revenue topped $5 billion during the quarter, 5.5 percent higher than a year earlier.
In the same quarter of 2006, Delta had posted a $2.2 billion net loss, but that included huge accounting charges related to the bankruptcy case.
The big accounting gains in this year's quarter stemmed from claims and liabilities discharged in the bankruptcy case, as well as from the adoption of so-called "fresh start" accounting rules in the wake of the bankruptcy case.
Most of Delta's revenue gain appeared to come from flying fuller planes and growth in international flying. Traffic rose 5.1 percent and the percentage of seats sold jumped to 82.8 percent vs. 79.7 percent a year earlier. Unit revenue, a key measure, rose 5.6 percent, to 11.78 cents per seat-mile.
Delta, which had long lagged the industry in unit revenue -- or how much it takes in for each passenger-mile flown -- said unit revenue is now at 96 percent of the industry average, up from 86 percent at the end of 2005.
"Our accomplishments this quarter are solid proof that our plan is working," Delta Chief Financial Officer Ed Bastian told employees in a memo Wednesday. He said the airline banked $79 million in profit sharing as a result, which will be paid out to employees next year if the airline meets its targets.
Delta's unit costs also rose almost 2 percent during the quarter, partly from accounting for future profit-sharing payouts and for stock-related awards after the company emerged from bankruptcy.
The airline's average cost of fuel dropped slightly, to $2.05 per gallon from $2.14.
Delta ended the latest quarter with $3.4 billion in unrestricted cash after recently re-negotiating some of its financing and credit card processing agreements to boost its reserves.
Delta in late April emerged from a 19-month trip through Chapter 11 bankruptcy proceedings, which saw it shed billions in debt, slash jobs and restructure routes.
"Delta's emergence from bankruptcy was a significant milestone in the history of the company and the airline industry," Delta Chief Executive Gerald Grinstein said in a press release. "In delivering the kind of outstanding financial, operational and customer service results we saw this quarter, it is clear Delta people at every level are producing a strong airline with a bright future."
Delta's financial release shed no light on the status of its plans to name a successor to Grinstein, 75, who has said he expects to leave the airline this summer.
Leading internal candidates are finance chief Ed Bastian and operations chief Jim Whitehurst, but Delta's new board has also retained a search firm to look externally.
In a conference call with investors, Grinstein signaled that the search could take longer than he expected.
"Given the magnitude of this decision, [Delta's board of directors] is taking a deliberative and determined approach," he said. Grinstein has said he hopes for an internal successor.