Delta Air Lines has a mixed first quarter

Delta Air Lines (Atlanta) today reported financial results for the March 2012 quarter.  Highlights from the quarter include:

  • Excluding special items(1), Delta’s net loss for the March 2012 quarter was $39 million, or $0.05 per share, and its pre-tax loss was $36 million.  The pre-tax result is a $355 million improvement year over year despite $250 million higher fuel expense.
  • Including a $163 million gain from special items, Delta’s GAAP net income was $124 million and its pre-tax income was $127 million.
  • Delta’s passenger unit revenues increased 14% and the company produced a unit revenue premium to the industry.
  • Delta ended the March 2012 quarter with $5.7 billion of unrestricted liquidity and adjusted net debt of $12.2 billion.
  • Delta’s return on invested capital for the last twelve months was 10.6%.

As of March 31, 2012, Delta had $5.7 billion in unrestricted liquidity, including $3.9 billion in cash and short-term investments and $1.8 billion in undrawn revolving credit facilities.

During the March 2012 quarter, Delta’s fuel expense rose by $250 million as a 14% increase in fuel price was offset by $45 million of fuel hedge gains and reduced consumption.

Excluding mark to market adjustments, Delta’s average fuel price(2) was $3.28 per gallon for the March quarter, which includes five cents per gallon in settled gains from its fuel hedging program.  On a GAAP basis, which includes mark to market gains on open hedges, the company’s average fuel price was $3.11 per gallon.

Delta recorded special items totaling a $163 million gain in the March 2012 quarter, including:

  • $151 million in mark-to-market gains for fuel hedges settling in future periods;
  • a $39 million gain associated with the exchange of slots at New York-LaGuardia and Washington-Reagan National; and
  • a $27 million charge for fleet, facilities and other items.

Delta recorded special items totaling a $2 million gain in the March 2011 quarter, including:

  • $29 million in mark-to-market gains for fuel hedges settling in future periods;
  • a $7 million charge associated fleet retirements; and
  • a $20 million loss on extinguishment of debt.

Copyright Photo: Michael B. Ing.

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