Delta Air Lines (NYSE:DAL) fell 2.16% on Thursday, as the airline posted a 20.8% drop in profit due to higher operating expenses. The fall in quarterly profit overshadowed the company’s expectations of a rise in passenger unit revenue between 2.5% and 4.5% in the current quarter.
The company posted a 2.5% increase in passenger unit revenue, with a 0.4% increase in capacity in the second quarter of the year.
Passenger revenue is up $261 million, with $100 million from the company’s Branded Fares initiatives. Cargo revenue is up 11%, with higher mail and freight. SkyMiles added to the company’s 5% rise in “other revenue.” Third-party refinery sales also contributed to “other revenue” increases.
Net income fell to $1.22 billion, with an EPS of $1.68 for the quarter ended June 30. Net income fell from $1.55 billion during the same quarter a year prior. Analysts forecasted an adjusted earnings per share of $1.67, higher than the adjusted EPS of $1.64 that the company posted.
Delta Air Lines (NYSE:DAL Suffer From Higher Fuel Costs
Operating expenses rose on higher fuel costs and salaries. The company paid an additional $338 million to profit-sharing employees in 2017. Aircraft fuel expenses rose 18% to $1.45 billion, while salaries rose 9% to $2.62 billion on the quarter.
The rising expenses are slightly offset by the company’s first quarterly rise in revenue growth in two-and-a-half years. The company forecasts revenue growth in the third quarter of the year, too. Operating margins rose from 17.4% last year to 18.4%.
Operating revenue rose to $10.79 billion, up 3.3%.
The company also returned $748 million to shareholders through share repurchases and dividends.
“The June quarter ranks among the best in Delta’s history as our people delivered top financial, operational, and customer satisfaction results – and it is an honor to recognize that performance with an additional $338 million toward our 2017 profit sharing,” said Ed Bastian, Delta’s chief executive officer.