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Delta Air Lines, Inc. Beats Earnings Estimates

Delta Air Lines released the earnings results from its fourth quarter before opening bell this morning, posting adjusted earnings of 78 cents per share on $8.2 billion in revenue. Analysts had been looking for earnings of 77 cents per share on $9.5 billion in revenue.

Delta Air Lines, Inc. Beats Earnings Estimates

Delta Air Lines reports several special items

Including special items, the airline posted a pretax loss of $1.1 billion, an operating margin of -8.6% and net loss of $712 million or 86 cents per share. For the full year, earnings excluding items were $4.5 billion. The full year’s results include $1.1 billion in profit sharing expenses. Of that amount $262 million was in the December quarter.

Special items in the fourth quarter included $1.2 billion for fuel hedges on mark to market adjustments and $75 million in charges on Virgin Atlantic’s mark to market adjustments on hedges. Delta also reported a $74 million charge related to fleet, facilities and a number of other items that are related to the restructuring of its fleet initiative. The airline also wrote down some of its facilities in Delta’s Concourse C. Additionally, Delta saw a gain of $29 million in connection with an insurance settlement.

Breaking down Delta Air Lines’ earnings report

Delta reported a 4.6% year over year increase in passenger revenue. Cargo revenue rose 2.1%, while other revenue rose 21.3%. The main driver of that increase was revenue from the airline’s SkyMiles program. Other drivers were third-party refinery sales and settlements in the company’s joint ventures.

Fuel expenses fell $342 million on the back of falling oil prices and higher profits from refineries. Delta paid an average of $2.62 per gallon for fuel during the fourth quarter. In the current quarter, management expects a $500 million benefit in fuel prices.

“The December quarter marks the sixth consecutive quarter with non-fuel unit cost growth below two percent, a testament that our cost initiatives and domestic upgauging efforts are continuing to deliver benefits,” said Delta Chief Financial Officer Paul Jacobson in a statement. “We still have many opportunities ahead of us and expect to again keep non-fuel unit cost growth below two percent for the March quarter, consistent with our long-term goal.”

Shares of Delta Air Lines rose as much as 3% in premarket trading after this morning’s earnings report.

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