At Delta Air Lines, cargo revenue in the fourth quarter of 2012 fell $15 million, a 5.9 percent year-over-year loss on declining freight yields.
The cargo result stood in stark contrast to Delta’s overall numbers for the quarter, which showed a $238 million profit.
The fourth-quarter cargo result simply served as a continuation of the decline felt throughout the year, as the carrier ended 2012 with cargo revenue down 37 percent when compared to 2011.
Delta also saw a loss at one of its biggest 2012 projects, the Trainer refinery. The refinery has not shown a profit yet, ending the quarter with a $63 million loss due to Superstorm Sandy. Delta officials expect the refinery to turn a modest profit in the first quarter of 2013. Even with these fourth-quarter losses, the overall picture was sunny, said Delta Chief Executive Officer Richard Anderson during a conference call.
“We will build on the success we enjoyed in 2012 by posting even better operating and financial results in 2013 as we execute on our commitment to sustainable and growing profitability for our investors,” Anderson said. “For our customers, we will again make targeted investments in our operations, products and facilities, and couple that with consistent execution to make Delta the preferred airline in the world.”
One of those investments includes Delta’s 49-percent stake in Virgin Atlantic, purchased in December, which is still subject to regulatory approval from both the U.S. Justice Department and European Commission. Delta officials put the approval timeline at six months and say the process is underway and on schedule.
“We anticipate strong traction from Virgin Atlantic, which will further enhance our position in New York,” Delta President Ed Bastian said during the call. “Initial customer reaction from the announced JV has been very enthusiastic."
First quarter revenue will increase 4 percent to 6 percent, officials predict. Delta is off to a good start in January, Bastian said, and it will finish the month, he anticipates, up by 5 percent to 6 percent.
Delta’s results were somewhat anticipated by analysts at Dahlman, Rose & Co., who are looking forward to a week’s worth of airline earnings announcements. US Airways is expected to release its results tomorrow, with the remainder of the large U.S. carriers following suit on Thursday.
“We expect the airlines to report better-than-expected earnings results due to a strong finish in December. We also expect management to be upbeat about expectations for January,” they wrote in a weekly report sent this morning. “We believe revenue trends are accelerating." - Jon Ross