Company produces quarterly profit despite more than $1 billion higher fuel expense

(TRAVPR.COM) ATLANTA, USA - August 4th, 2011 - Delta Air Lines (NYSE:DAL) has reported that its second quarter net income for the June 2011 was $366 million, with a strong top line revenue growth of 12% year over year which helped offset more than $1 billion higher fuel expense.

The airline company said it generated $1 billion of operating cash flow and $700 million in free cash flow in the quarter and ended the June 2011 quarter with $5.6 billion in unrestricted liquidity.

“High fuel prices are putting significant pressure on the industry, but the benefits of Delta’s strategic actions and the dedication of Delta employees are evident in the solid profit we produced despite more than $1 billion in higher fuel expense,” said Richard Anderson, Delta’s chief executive officer. “Our revenue momentum, coupled with the capacity reductions we are making in September and actions to get our non-fuel costs to 2010 levels, will generate the margins we need to hit our return targets.”

According to the airline, operating revenue grew $1 billion, or 12%, in the June 2011 quarter compared to the 2010 quarter while traffic rose 1% on a 2.5% increase in capacity.

• Passenger revenue increased 13%, or $882 million, compared to the prior year period. Passenger unit revenue (PRASM) increased 10%, driven by a 12% improvement in yield partially offset by a 1.3 point decline in load factor. Passenger revenues were negatively impacted by $125 million as a result of the March events in Japan.
• Cargo revenue increased 25%, or $53 million, on higher cargo volume and yield.
• Other revenue increased 5%, or $50 million, from higher third-party maintenance revenue.

Delta is recalibrating its business to succeed in a permanent, high fuel price environment by taking actions among others like; using fare increases, fuel surcharges and revenue initiatives to recover fuel cost increases through ticket prices; reducing its December quarter capacity by 4 – 5% year over year, retiring 140 of Delta’s least efficient aircraft by the end of 2012; and implementing initiatives to reduce the company’s non-fuel unit costs to 2010 levels by the end of 2011.

As part of its plan to generate $1 billion in incremental revenue by 2013, Delta launched its new international premium economy product, Economy Comfort, on June 1. Revenue from Economy Comfort and other new seat-related products and merchandising initiatives are expected to generate $150 – 200 million in revenue in 2011.

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