US airlines see light at end of tunnel

22nd Apr 2009

The aviation industry has finally been given something to cheer after both Delta Airlines and United Airlines posted smaller-than-expected quarterly losses. The two US aviation heavyweights cited lower fuel prices and schedule cuts helping them to fight off sharp falls in demand.

Stockmarkets cheered the results with Delta rising 19 percent and United up by 13 percent, as investors saw this as the worst over for the aviation downturn.“We’ve seen some signs of stabilisation, as the revenue environments appear to have bottomed out,” said Richard Anderson, Delta’s chief executive. “But it’s still a bit early to call, and we expect to face significant headwinds throughout 2009.”

Delta reported a net quarterly loss of US$794m - or 96 cents a share versus analyst estimates of $1.01. The company broke even when losses on fuel hedging were removed.

Operating revenue dropped 15 percent to $6.7bn due to a sharp fall in demand. The airline also cut capacity 6.4 percent.

The results were the first since the merger of Delta and Northwest Airlines in October. Shares climbed 19 percent on the results.


The company plans to cut as much as 8 per cent of its flight schedule this year.

United also trimmed its losses, which fell to £382m from $549m a year ago. It also beat Wall Street expectations - losing $4 per share versus analyst estimates of $4.37.

Operating revenue fell by 22 percent to $3.69bn, while operating expenses fell 23 percent to $3.97bn.


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