Delta Air Lines, Inc. Beats Earnings Estimates

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Delta Air Lines, Inc. Beats Earnings Estimates
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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 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.

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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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