DELTA DOWN BUT BETTER THAN AT ANY TIME SINCE 9/11 AND WHEN FUEL COSTS ARE NOT A PROBLEM YOU HAVE TO BE UPBEAT

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By TESTCustomwebLP TESTCustomwebLP January 19, 2011 14:47

DELTA DOWN BUT BETTER THAN AT ANY TIME SINCE 9/11 AND WHEN FUEL COSTS ARE NOT A PROBLEM YOU HAVE TO BE UPBEAT

Delta Air Lines reported its first fourth-quarter profit in a decade this week on the back of improved revenue from ticket sales and other associated products and services.

The poor weather conditions took their toll with earnings missing analysts’ expectations, sending shares down 5.5% to $12.05 at one point before the open yesterday.

These figures are more important than many we have seen because they continue to confirm that a rebound in travel and tourism is well under way in the US market and is solid lifting earnings among airlines, it also shows that although fuel prices threaten the industry’s profits, airlines such as Delta can take it. This is of course due to capacity cuts and/or mergers over the past three years that have allowed ticket prices to increase and will continue to allow them to increase. Hopefully the increase in fuel prices that is set to continue throughout 2011 will underpin further airline consolidation to ensure that overcapacity does not creep back and drive airlines into the red again.

The company has said it plans to increase its capacity by 1% to 3% this year, replacing its aging narrow-body aircraft fleet with larger aircraft.
Delta reported a profit of $19 million, or 2 cents a share, compared with a prior-year loss of $25 million, or 3 cents a share. Excluding hedging-related impacts items and prior-year merger-related expenses, earnings were 19 cents, compared with a prior-year loss of 27 cents. Revenue increased 14% to $7.79 billion. Delta recently predicted weather difficulties would cut its fourth-quarter profit by $45 million.

Analysts had forecast earnings of 24 cents on revenue of $7.74 billion.
Passenger revenue rose 15%, while passenger revenue per available seat mile grew 8%, following a prior-year decline of 5.4%. Other revenue rose 14% mostly due to higher revenue from its frequent flier program and other services. Load factor fell 0.6% to 81.1% from 81.7% a year earlier. Capacity increased 7%, after a prior-year drop of 8.2%.

Delta’s fuel price per gallon rose 14%, net of hedging. In good news for the US market there has been significant domestic airfare increases in the past three days across both Delta and United Airlines on the majority of their respective route systems. Delta’s domestic ticket prices increased by up to $20 roundtrip, while United raised domestic prices by up to $10 roundtrip.

Look to Delta to expand during 2011/2012. So long as they can keep their domestic market in check they are able to fix their eye on international expansion. With everyone worrying about the expansion of airlines based in the Middle East maybe it is time for a break and a fresh look at the global plans for the old US giants as it seems they are back and ready to take on the world through expansion and merger. So is Delta interested in Virgin Atlantic? They are looking is the official line.

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By TESTCustomwebLP TESTCustomwebLP January 19, 2011 14:47
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