Rising fuel costs hit results at Delta Air Lines

28th Jul 2011
Rising fuel costs hit results at Delta Air Lines

Delta Air Lines fell short of profit estimates for the three months to June 30th as fuel costs grew at a higher rate than revenue.

Net income at Delta stood at $198 million, or $0.23 per diluted share, for the second quarter, compared with $467 million a year earlier.

Quarterly revenue rose 12 per cent to $9.15 billion.

Delta Air Lines down following results

Delta’s operating expense increased $1.4 billion year-on-year, with more than $1 billion of this increase attributable to a 39 per cent increase in fuel prices.

The remainder of the cost increases were primarily driven by maintenance volumes and higher revenue-related expenses.

“We have seen unit cost growth from not only high fuel prices, but also maintenance volumes and revenue-related expenses,” said Hank Halter, Delta’s chief financial officer. 

“We are moving aggressively to stem this cost growth with a target of bringing our non-fuel unit costs to 2010 levels by the end of the year.”

Shares in Delta fell following the news, closing down 5.1 per cent at $7.61, below their year low of $7.78, after trading as low as $7.29 earlier in the session.

Delta - the second biggest carrier in the world behind United Continental - has invested in new aircraft seats and better food and wine offerings to boost revenue in recent months.


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