Delta Profits, Forecast Not Taking Off

For the full year, Delta reported adjusted net income of $1.6 billion on revenues of $36.67 billion, compared with net income of $1.19 billion in 2011 on revenues of $110.88 billion. The consensus estimates called for EPS of $2.38 on revenues of $35.12 billion.

On a GAAP basis, the company reported quarterly EPS of $0.01, compared with $0.50 in the fourth quarter of 2011. Special items totaled $231 million, including to restructuring charges, an early debt extinguishment, and a mark-to-market loss on fuel hedges. Delta estimates that Hurricane Sandy cost it $100 million in airline and refinery operations.

The company’s CEO said:

We enter 2013 as a stronger airline, with initiatives in place to build on our 2012 success. In the year ahead, we will advance our position around the world and continue to build a better airline for our shareholders, customers and employees.

For the first quarter of 2013, Delta expects to post an operating margin of 2.5% to 4.5% on fuel prices of $3.15 to $3.20 per gallon and capital spending of $500 million to $600 million. Revenues are forecast to rise 4% to 6% and unit costs are forecast to rise 6% to 8%. The airlines expects seat capacity to be 2% to 4% lower in the quarter.

Shares are up fractionally at $13.67 in premarket trading this morning, in a 52-week range of $8.42 to $14.11. Prior to today’s release Thomson/Reuters had a consensus price target of around $16.30 on the company’s shares.