Surging fuel price hurts Delta Airlines’ Q1 earnings

delta Airlines

Delta Airlines has just disclosed that its adjusted pre-tax income for the March 2017 quarter fell to USD847 million, a USD713 million decrease from the March 2016 quarter, primarily driven by higher fuel prices.

The disclosure was made in its financial results for the March quarter 2017. The company noted that:

“Despite fuel price pressures, the Delta people once again delivered solid results across the board, with double digit operating margins, strong improvements in customer satisfaction, and progress on our international expansion with the closing of our Aerom√©xico transaction,” said Ed Bastian, Delta’s chief executive officer. “Producing these results in our toughest quarter of the year shows not only how far we’ve come, but also that we have more opportunity in front of us to continue building a better airline for our employees, customers, and owners.”

The impact of the storm in April “Last week, severe weather in Atlanta caused significant disruptions to Delta’s operations. The company cancelled approximately 4,000 flights as a result of the weather and the subsequent operational recovery. The company returned to normal operations on Sunday afternoon and had a 100% mainline completion factor yesterday. Delta currently estimates the storm will reduce its June quarter pre-tax income by $125 million”.

“We hold ourselves to a high standard and we apologize to all of our customers who were impacted by last week’s events,” continued Bastian. “I also want to thank the Delta people for working through some incredibly tough conditions to take care of our customers and reset our operation. They proved again they are the best in the business.”

Delta’s operating revenue for the March quarter was down $103 million versus prior year, including $20 million of lower year over year currency hedge gains. Passenger unit revenues declined 0.5 percent on 0.5 percent lower capacity.

“March marked the first month of positive passenger unit revenues since November 2015 and we are encouraged by the current fare and demand trends across the network. We expect June quarter passenger unit revenues to increase one to three percent and remain positive throughout the year,” said Glen Hauenstein, Delta’s president. “However, we will keep our full year capacity growth capped at one percent to support this unit revenue momentum and the company’s return to margin expansion.”