Delta Air Lines Narrows Loss But Misses Earnings Estimates

Delta Air Lines (DAL) reported a narrower fourth-quarter loss Tuesday, helped by lower fuel costs and declining restructuring charges, but results failed to meet Wall Street's expectations. The world's largest carrier by revenue, posted a net loss of $25 million, or 3 cents a share, versus a fourth-quarter 2008 loss of $1.44 billion, or $2.11. On an adjusted basis, the Atlanta-based company reported a loss of 27 cents a share, missing analysts' average estimate by 3 cents, according to Thomson Reuters.Revenue for the three-month period ending Dec. 31 increased 1% to $6.81 billion, short of the Street's estimate of $6.86 billion. Like other major carriers, Delta benefited from lower year-over-year jet fuel costs, which fell 26%, as well as a decrease in the rate of declining demand, suggesting that the worst of the industry's downturn is in the past. Revenue per available seat mile, considered to be the best measure of airline revenue, dropped by 5.4% after tumbling by double-digits in the previous three quarters.

A nearly 90% reduction in year-over-year charges related to the carrier's merger with Northwest also aided the bottom line. "As a result of the strategic pieces we put in place in 2009 and the strong momentum of our merger integration, Delta is now positioned to capitalize on the economic recovery under way and expects to generate positive [revenue per available seat mile] improvements each month of this year," said Chief Executive Richard Anderson in a statement.

Less Capacity in the First Quarter

Of the major carriers reporting quarterly results so far, Delta and American Airlines' parent AMR Corp. (AMR) missed estimates, while Continental (CAL) and Southwest (LUV) swung back to Street-beating profitability.

For the first quarter, Delta expects capacity to drop 5% to 7% internationally and 1% to 3% domestically. Operating margin is forecast to break even.

For the full year, the company reported a net loss of $1.24 billion, or $1.50 a share, versus a year-ago loss of $8.92 billion, or $19.08. Revenue declined 24% to $28.06 billion from $22.70 billion. Delta ended the quarter with $5.4 billion in unrestricted liquidity and expects that to climb to $5.6 billion by the end of the current quarter.
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