Delta Weathers Bad Winter For 1Q Profit

It seemed to be a forgone conclusion that the airlines would not be reporting strong financial numbers for the first quarter after Mother Nature wrecked their schedules.

Don’t tell that to Delta Airlines. The company reported $213 million in net income, a $7 million increase over the same period in 2013.

Excluding special items, Delta’s net income was $281 million, a $196 million rise year over year.

All this despite 17,000 cancelled flights in the quarter – double the number of cancelled flights in the first quarter of 2013. The cancellations resulted in $90 million of lost revenue.

"The March quarter's record results in the face of unprecedented weather show the strength and resilience of Delta.  By delivering the industry's best customer service, operational reliability and financial performance, Delta people continue to show that they are the very best in the business," said Richard Anderson, Delta's chief executive officer. 

"Our work is not finished, and there is great opportunity ahead as we expect the June quarter to produce 14 to 16 percent operating margins.  We are transforming Delta into a high-quality S&P 500 company that consistently delivers strong earnings growth and shareholder returns." 

Anderson also made a point in his Wednesday webcast to single out Delta employees for their extraordinary efforts in adjusting to the schedule changes and all the while keeping customers happy in the middle of a lot of frustration.

And why not be happy? After all, the company was able to contribute $99 million to the employee profit sharing program during the quarter.

Total passenger revenue increased 5 percent to $7.7 billion. Latin America led the way in increases with an 18.1 percent rise to $655 million, followed by a 9.4 percent U.S. revenue rise to $3.7 billion.

"March quarter's top line growth of 5 percent shows the strength of Delta's revenue momentum even through the revenue loss from weather and a shift of the Easter holiday traffic into April," said Ed Bastian, Delta's president.

"We see continued revenue strength as we move through the year from corporate revenue gains, the benefits of the Virgin Atlantic joint venture and improved ancillary revenues.  These initiatives, coupled with a solid demand environment, should lead to unit revenue growth in the mid-single digits for the June quarter."

Lower fuel costs helped the cause, as Delta saw a $167 million drop in fuel costs.