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Delta Air Lines sees fourth-quarter net profits plunge hit by a 30% jump in pilot salaries

Thursday, January 12, 2017 8:25
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Delta Air Lines Inc. (NYSE:DAL) saw its net profits plunge by 37% in the fourth-quarter as a 30% jump in salaries and related costs weighed on the US firm.

The country’s No. 2 carrier by passenger traffic reported net income of $622mln, down from $980mln a year earlier.

Delta said the profit decline stemmed from the recent agreement it struck with its 13,000 pilots, granting them a 30% salary hike by 2019.

The four-year deal, ratified on December 1, is retroactive to January 1, 2016.

In early New York trading, Delta shares were down 0.1% to US$51.39.

However, excluding special items, Delta’s earnings per share of 82 cents hit analysts’ average estimates as expenses for aircraft fuel and related taxes fell 12%.

The Atlanta-based airline’s operating revenue fell to $9.46bln from $9.50bln, slightly above the analysts’ average estimate of $9.40bln.

Delta said unit revenue — how much an airline takes in for each passenger flown a mile — fell 2.7% on a 0.9% increase in capacity in the fourth-quarter.

The airline said it expects its first-quarter unit revenue to be unchanged to up 2% as capacity remains flat or falls by as much as 1%.

Unit revenue in the airline sector is  approaching positive territory after two years of declines amid rapid capacity growth in the industry.

Story by ProactiveInvestors


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