Atlanta based Delta Airline which operates daily flights to Lagos, posted a strong profit for the year 2013, surpassing its forecast. The mega airline’s profit for the year came to $2.7 billion, excluding a one-time accounting gain related to taxes and other items.
The figures were $1.1 billion better than 2012 results, according to the company.
The 2013 figure however included a fourth quarter profit of $558 million. The profit, according to the airline, was driven by both increases in operating revenue and strong cost discipline by the carrier.
Operating revenues increased 3 percent, or $1.1 billion year-over-year to $37.77 billion due to a 3.7 percent increase in passenger revenues to $32.94 billion.
The passenger revenue data strongly reflects Delta’s capacity shift away from 50 seat regional jets to larger jets and small mainline aircraft such as the Boeing 717.
Regional carrier revenue declined 2.6 percent to $6.41 billion, while mainline revenue increased 5.4 percent to $26.53 billion.
The data shows further that yields increased 2.6 cents to 16.89 cents per passenger mile while passenger revenue per available seat mile (PRASM), which includes ancillary revenues such as checked baggage fees and change fees, increased a relatively modest 2.7 percent to 14.15 cents.
“Our December quarter profit caps off a successful year for Delta with strong profitability and margin expansion, industry-leading operations and significant improvements in customer satisfaction. Across the board this was an outstanding year and all credits for these achievements go to the 78,000 Delta employees worldwide.
“We have a solid set of initiatives in place to improve our financial results, operational performance and customer satisfaction levels beyond 2013’s record levels and remain focused on being the best airline for our employees, customers and shareholders”, said Richard Anderson, Delta’s chief executive officer.
Consolidated unit cost excluding fuel expense, profit sharing and special items (CASM-Ex2), was 1.4 percent higher in the December 2013 quarter on a year-over-year basis, driven by the impact of wage increases and operational and service investments.
Fuel expense, excluding mark-to-market adjustments, declined $91 million as a result of lower market fuel prices and better settled hedge performance. Delta’s average fuel price 3 was $3.05 per gallon for the December quarter, which includes $0.06 in settled hedge gains.
Operations at the Trainer refinery produced a $46 million loss for the December quarter and a $116 million loss for the full year. While lower crack spreads pressured results at the refinery, they also reduced market jet fuel prices and helped lower Delta’s overall fuel expense.
“Delta’s non-fuel unit cost growth of just over 2 percent for all of 2013 was three points better than our projections at the start of the year due to the success of our cost initiatives.
“These initiatives have built the foundation for managing our cost growth over the longer term and our performance in the back half of 2013 puts us on pace to keep our annual unit cost growth below 2 percent going forward,” said Paul Jacobson, Delta’s chief financial officer.
By: Sade Williams
