Delta anticipates margin growth on lower fuel costs in Q3

Washington DC
Source: Flightglobal.com
This story is sourced from Flightglobal.com

Delta Air Lines anticipates that it generated a 12% to 14% operating margin during the third quarter, continuing its trend of improving financial results.

This is an improvement on both the Atlanta-based carrier’s previous guidance of an 11% to 14% operating margin in the quarter as well as its 10.2% margin during the same period in 2012.

The margin growth comes as Delta anticipates flat to 2% growth in its unit costs excluding fuel, and a decrease in its fuel bill to between $2.98 and $3.03 per gallon including taxes, hedges and the refinery.

The airline previously anticipated fuel costs of $3.05 to $3.10 per gallon in the third quarter. It paid $3.03 per gallon for fuel during the quarter ending 30 June.

Capacity will be up 2% to 3% compared to the third quarter of 2012. This is tighter guidance than the 1% to 3% increase Delta predicted in July.

"This growth is being driven by our upgauging strategy, which will allow us to produce these capacity levels with 16 fewer aircraft or about a 1.5% reduction in our fleet size," said Ed Bastian, president of Delta, in July.

The airline has not released passenger revenue per available seat mile (PRASM) guidance for the quarter, but reported increases of 5.5% in September, 4% in August and 3% in July.