Delta reports $1.26 billion quarterly profit, takes hit from system outage in August

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Delta Air Lines reported a $1.26 billion profit for the third quarter, down slightly from a year ago, as it tackled challenges from its massive system outage in August and weakness in revenue.

Atlanta-based Delta’s outage caused it to cancel 2,300 flights over a few days in August and led to a $150 million hit to its pre-tax income.

“Delta’s resiliency stood out this quarter as we worked through the outage, continued revenue headwinds, and volatile fuel prices,” said Delta CEO Ed Bastian in a written statement.

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Delta outage. Credit: John Spink / AJC

The company’s operating revenue fell 6 percent in the quarter to $10.5 billion compared with the year-ago period, due to the outage, currency challenges and weak unit revenues. Its quarterly operating expense fell 4 percent year-over-year to $8.5 billion, including a 22 percent decline in aircraft fuel expense.

Chief financial officer Paul Jacobson said in a written statement that Delta “overcame the cost headwinds from the outage to meet our guidance.”

Amid its challenges, Delta plans to slow its growth for the December quarter.

According to Bastian, Delta “will be taking a cautious approach to 2017 by keeping our capacity in line with the December quarter’s 1 percent growth level.”

Delta says it is working to address the unit revenue declines with “capacity actions and revenue management initiatives.”

The company still expects unit revenues in the December quarter to fall by 3 to 5 percent year-over-year. Competition, price discounting and a changing mix of fares can contribute to weak unit revenue. Meanwhile, Delta and other airlines have made efforts to invest in improving their offerings for lucrative corporate travelers to merit higher prices.


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