Delta Reports $161 Million Net Loss for Third Quarter

Delta Air Lines reported a net loss for the third quarter of $161 million, or $0.19 per share, and said it would cut capacity by 3 percent for 2010. Excluding $212 million in special items, however, the airline reported net income for the third was $51 million, or $0.06 per share. Delta said this result is $115 million better than prior year on a combined basis.

Delta also said it has achieved $500 million in merger benefits in the first three quarters of 2009, reaching its 2009 target ahead of plan. But special charges associated with the merger cost $212 million, including $83 million to write-off unamortized non-cash debt discount associated with the refinancing of certain Northwest debt; $78 million in merger-related items; and $51 million in charges for employee severance programs.

Delta’s operating revenue on a GAAP basis grew 32 percent to $7.6 billion in the September 2009 quarter compared to the prior year period as a result of its merger with Northwest Airlines. On a combined basis, total operating revenue declined $2.0 billion, or 21 percent, and total unit revenue (RASM) declined 17 percent.

On a combined basis total operating revenue declined 21 percent versus prior year due to the global economic recession. Passenger revenue decreased 22 percent, or $1.8 billion, compared to the prior year period due to the global economic recession and a 4 percent capacity reduction. Passenger unit revenue (PRASM) declined 18 percent, driven by a 19 percent decline in yield.

In the September 2009 quarter, Delta’s operating expense on a GAAP basis increased $1.8 billion year over year due to the impact of the company’s merger with Northwest Airlines, partially offset by lower fuel price. On a combined basis, excluding special items, operating expense decreased $2.1 billion due to lower fuel expense, productivity improvements and merger benefits.

Delta hedged 53 percent of its fuel consumption for the September 2009 quarter, which resulted in $226 million in realized fuel hedge losses and premiums for the period. As a result, Delta’s average fuel price for the September 2009 quarter was $2.13 per gallon, which includes $0.11 per gallon associated with fuel hedge losses.