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Delta Air Lines and US Airways, two of the largest US carriers, reported small quarterly losses on Wednesday as higher ticket prices and fuller aircraft helped offset most, but not all, of a sharp increase in fuel costs.
During the first three months of 2012, both airlines experienced about a 14 per cent increase in basic fuel prices, but were only able to push up fares and revenues by more modest amounts.
Airlines have been struggling to keep pace with rising fuel costs for months, and last week a handful of US carriers, including AMR, parent of the bankrupt American Airlines, reported results that were dented by high fuel prices.
On Wednesday Richard Anderson, chief executive of Delta, said the mix of cost and capacity discipline meant the company would be more than “solidly profitable” over the full year “despite higher fuel prices.”
The International Air Transport Association estimates that the US airline sector will generate about $900m of profits in 2012 in spite of high fuel costs, thanks to improving consumer confidence and capacity restraint.
For the first quarter, Delta posted a net loss of $39m, or $0.05 a share, compared with a $320m loss in the same period in 2011. Those numbers exclude $163m in one-off gains on fuel hedging contracts and the sale of landing slots.
In total, for the three months to the end of March, Delta reported net profits of $124m, up from a loss of $318m in 2011, on revenues that rose 9 per cent to $8.4bn thanks to strong performance on its Atlantic and Pacific routes.
Meanwhile, US Airways reported a first quarter net loss of $22m (or about $0.13 per share), excluding a $70m gain on slot sales. That compares with a net loss of $110m in the same period in 2011.
Including all special items, US Airways swung to a net profit of $48m, or $0.28 per share, from a net loss of $114m, on revenues that climbed more than 10 per cent to $3.3bn.
Doug Parker, chief executive of US Airways, said the company was positioned strongly for 2012 and beyond and was “encouraged with the overall strength in passenger demand.”
In its earnings release US Airways said little more about its efforts to secure a merger with American Airlines. Last week US Airways secured the backing of American’s unions for the move but a deal faces significant obstacles.
In early trading Delta shares, which have climbed by about 30 per cent over the year to date, slipped about 1 per cent to $10.44. US Airways shares were broadly flat at about $9.29. So far this year they have risen by more than 80 per cent on deal news.