Apparently customers are still choosing to fly in spite of higher airfares and baggage fees. On Wednesday, Delta Air Lines reported a profit of $124 million, or 15 cents per share, for the first quarter of 2012.
Still, the Atlanta-based airline with a major hub in Salt Lake City would have reported a $39 million loss for the quarter had it not been for its financial bets on jet fuel that helped produce a gain along with $39 million from a slot exchange with U.S. Airways.
“This is the best March quarter Delta has generated since 2000,” Delta President Ed Bastian said during a morning conference call with analysts and reporters. “So clearly our plan is working.”
Delta said it paid out $250 million more for fuel between Jan. 1 and March 31 than it did in the same quarter a year ago but that hedging — contracting for a set amount of fuel at a fixed price — offset the increase by $45 million.
In response to rising fuel costs, Delta also cut capacity by 3 percent, reducing the number of available seats and thereby driving up demand. The airline reported a passenger revenue increase of 14 percent.
Revenues overall rose over the prior year’s first quarter to $8.41 billion.
Fuel hedging will play a part in second and third quarter earnings as well. Chief Financial Officer Paul Jacobson forecast fuel costs at $3.28 per gallon for April 1 through June 30 and $3.27 per gallon between July 1 and Sept. 30.
“Running a reliable operation is important to our customers and clearly contributed to our revenue out performance,” Delta CEO Richard Anderson said.
However, the airline will continue to trim expenses wherever possible in order to safeguard shareholder returns, he said. Those cost-cutting measures include eliminating aging aircraft that require hefty maintenance and also providing a special retirement offer to trim its workforce.
Glen Hauenstein, Delta’s executive vice-president of revenue management and network planning, said the hub at Salt Lake City’s International Airport is performing well.
“We do not expect any layoffs in the Salt Lake area,” Hauenstein said. “We have some seasonal adjustments that we make. They’re going to be driven by demand and fuel.”