Delta Reports
Loss On Fuel Costs
Delta Air Lines reported a
wider-than-expected third-quarter loss on Wednesday as it faced more than
USD$800 million in extra fuel bills due to the spike in oil prices during the
quarter.
"Fuel dropping like a
rock is a big offset to the economy," said Delta chief executive Richard
Anderson.
He added that Delta is
"well positioned to weather the turmoil in the market," and did not
need to tap tight credit markets in the near future to fund aircraft
deliveries.
Although the price of oil
has returned to the same level as a year ago, around USD$76 per barrel, it
jumped to a record-breaking USD$148 over the summer. That dashed airlines'
hopes of a third-quarter profit, but results are expected to improve if oil
stays at current levels.
Delta said it is expecting a
small loss in the fourth quarter, and is already starting to see "a little
bit of demand softening" in its lucrative international business. But
analysts are still forecasting a return to profit for the industry next year.
Delta increased operating
revenue by 9 percent, to USD$5.7 billion, even though it reduced its flying
capacity in the quarter, helped by strong trans-Atlantic business, higher fares
and more fees. But the airline's operating costs increased USD$814 million, or
17 percent, almost entirely due to higher fuel.
For the full year, Delta
expects passenger unit revenue to rise 7 to 9 percent as it cuts flights and
raises fares. It is expecting domestic capacity to fall 8 to 10 percent for the
year, and capacity on its more lucrative international routes to rise 14 to 16
percent.
(Source: airwise.com 10/15/08)
Southwest Reports Net Loss Due To Fuel Hedges
Southwest Airlines reported
a quarterly net loss on Thursday, reversing a year-ago profit, on charges
related to its fuel hedging.
The low-cost airline's
third-quarter net loss amounted to USD$120 million, compared with a profit of
USD$162 million a year earlier. Excluding one-time items, Southwest earned
USD$69 million.
The airline industry has
been severely battered this year by high fuel costs that peeked at a record
high in July before falling rapidly.
Southwest, whose fuel hedges
are the envy of the industry, was somewhat insulated from the spike in fuel
prices but reported charges of USD$247 million related to adjustments on a
portion of the future period of its hedge portfolio.
The airline's revenue rose
about 12 percent to USD$2.9 billion. The company ended the quarter with USD$3.4
billion in cash and short term investments.
(Source: airwise.com 10/16/08)
Delta Ready to Go Toe-to-Toe
With AirTran
Delta could be
ratcheting up its head-to-head competition with rival AirTran. Both carriers
operate large hubs from Atlanta. The Atlanta Journal-Constitution writes Delta "is concentrating its growth
in Atlanta on markets where it competes head-to-head with AirTran Airways,
according to a report from Credit Suisse analyst Daniel McKenzie." The
report adds that makes it "increasingly evident that Delta has identified
the worsening macro backdrop as an opportunity to crack down" on AirTran.
If true, The Wall Street Journal's Middle Seat
Terminal blog writes "for the first quarter of 2009, Delta's scheduled
capacity growth in AirTran markets represents a 10% increase, year-over-year.
Compare that 10% growth rate to the 4.4% bump Delta plans for markets where the
Atlanta-based carrier doesn’t compete with AirTran." The Journal's blog
also notes that Delta's move "could be seen as an effort to regain
territory it may have lost to the Orlando-based discount carrier" during
AirTran's period of rapid growth.
(Source: usatoday.com 10/17/08)
Continental Reports Quarterly Loss, But Beats Expectations
Continental Airlines this morning reported a third-quarter
loss of $236 million ($2.14 per share). Reuters writes "excluding some one-time items, it
reported a loss of $1.32 per share. That was narrower than the $1.55 per share
loss Wall Street was expecting, according to Reuters Estimates."
Continental reported a profit of $241 million ($2.15 per share) during the same
quarter a year ago. Discussing
this year's results, The Associated Press notes Hurricane Ike cost the carrier about
$50 million in operating profit after forcing Continental to shut down its
Houston hub for more than two days in September. "And the carrier had to
contend with a 68% spike in fuel costs to $1.5 billion during the quarter, as
crude prices flirted with $150 a barrel mark in July," AP adds. AP says
"Continental's strategy of hedging against high oil prices backfired when
oil prices tumbled later in the period. The company said it recognized $63
million in fuel-hedging losses, but is still $78 million ahead for its hedging
this year." Elsewhere, Continental says it will delay the delivery of 18
jets from Boeing. Two Boeing 777s will now be delivered in 2010, instead of
next year. The Wall Street Journal adds Boeing and Continental also
"reached an agreement in principle … to reschedule 16 deliveries set for
the next two years. The deliveries will now take place no sooner than
2011."
(Source: usatoday.com 10/15/08)
Updated Delta
Administrative Fees – Effective 4/1/08
Change Penalty for domestic
nonrefundable fares $100
*applies to reissues, cancellations & exchanges
Direct Ticketing Charge $25
External Reissue Charge $30
Curbside Check-in (Sky Caps) $3 per
checked item
Unaccompanied Minor Fee $100
flat rate
Checked Bag Fee $50
*applies to second checked bag
Oversize Baggage Fee $150
each way
Pets in Cabin $100
each way
Pets as Checked Baggage $200
each way
Plastic Bag Fee (for gate
checked strollers/car seats) $5 per
(Source: Delta Travel
Professionals e-mail blast 4/1/08)
**For
the purpose of this advisory, Boehm Travel Companies may have condensed the
original versions of the referenced news stories. For a complete review, please
refer to the source as listed.