Delta Air Lines Inc. and US Airways Group Inc. posted profits Tuesday that beat analysts’ estimates in the first quarter, traditionally the industry’s weakest period, as they filled more seats.
Earnings excluding certain items were $85 million, or 10 cents a share, Atlantabased Delta said in a statement. Analysts had estimated 6 cents, the average of 15 projections in a Bloombergsurvey. US Airways reported a profit of $55 million, or 31 cents a share, which topped the 28-cent average estimate.
Both carriers had paying passengers in more than 81 percent of their available seats, and they wrung out more revenue from each seat flown a mile, a benchmark gauge. Delta hadn’t reported a profit in the first three months of the year since 2000, Chief Financial Officer Paul Jacobson said in a memorandum to employees.
“It’s a rare occurrence for airlines to be profitablein the first quarter,” said Michael Derchin, a CRT Capital Group LLC analyst in Stamford, Conn. “It’s a sign of structural change working - consolidation, capacity discipline.”
Derchin, who rates Delta and US Airways as buys, said he expected that airlines may keep paring available seating.
Delta gained 10.4 percent to close Tuesday at $16.72, while US Airways rose 5 percent to $16.30. Delta said unit revenue, or revenue for each seat flown a mile, will drop2 percent to 3 percent for April amid waning demand from mandatory government budget cuts and a “softening” in leisure flying that carried over from late March.
Unit revenue rose 4.1 percent at Delta and 2.4 percent at US Airways last quarter. Delta said sales increased 1 percent to $8.5 billion, while US Airways posted a 3.5 percent gain to $3.38 billion.
US Airways agreed Feb. 14 to merge with AMR Corp.’s American Airlines in an $11 billion all-stock deal, a combination that will create the world’s biggest carrier. Mergers allow airlines to cut costs and gain pricing power.
Early integration planning is “going well” and the merger is still expected to be finalized in the third quarter, US Airways Chief Executive Officer Doug Parker said in the statement. Parker will lead the combined carrier, which will retain the American name and Fort Worth headquarters.
AMR said last week that it had a first-quarter profit of $8 million excluding bankruptcy costs and other onetime items. Analysts project United Continental Holdings Inc. to be alone among the seven largest U.S. carriers to post a quarterly loss when it reports results this week.
Including one-time charges for facilities and fleet and a gain for fuel hedges, Delta’s net income fell 94 percent to $7 million, or 1 cent a share, from $124 million, or 15 cents, a year earlier.
US Airways said its net income slid 8.3 percent to $44 million, or 26 cents a share, from $48 million, or 28 cents.
Business, Pages 23 on 04/24/2013