Higher fares boost Delta’s third quarter profits
Oct. 25, 2011, Minneapolis, Min. - Higher fares helped Delta Air Lines post a bigger third-quarter profit even though fuel prices jumped and passenger traffic was flat.
But the company's results missed Wall Street expectations and helped push down its stock price 2.3 per cent in pre-market trading.
In the past, airlines struggled to make money in a weak economy or when fuel prices rose. Now, Delta and other airlines appear committed to raising fares or cutting back on flying to stay profitable.
Delta and other big carriers pushed through another fare increase on Monday, although it may not stick. The company also cut its flying by 1 per cent in the most recent quarter, compared with a year earlier. And it said it will cut as much as another 5 per cent during the last three months of this year.
Delta appears to be following an industry strategy of charging enough to cover the cost of flying, even if that means some people don't fly. Delta's yield — one way of measuring fares — rose 11 per cent compared with a year earlier. Traffic fell slightly, although Delta said corporate demand remained strong.
Delta Air Lines Inc. reported net income of $549 million, or 65 cents per share, up 50 per cent from $366 million, or 43 cents, a year earlier. Revenue rose 10 per cent to $9.8 billion.