Delta posts big profit despite drag at year’s end


Delta Air Lines reported a nearly $4.4 billion profit for 2016, down slightly from $4.5 billion a year earlier as the carrier faces pressures from higher fuel costs and pay increases to pilots and other employees.

The result will produce more than $1 billion in profit sharing for employees, Delta CEO Ed Bastian said. Payouts are scheduled for Feb. 14, Valentine’s Day.

Delta has close to 30,000 employees based at its Atlanta headquarters and hub, and its payroll ripples across the metro economy.

Despite the strong annual result, Delta’s fourth quarter profit fell 37 percent, primarily due to a new pilot labor contract with immediate 18 percent pay raises. It had $622 million in net income in the quarter, down from $980 million a year earlier.

Delta’s unit revenue — the amount generated from each seat-mile flown — also has been weak amid stiff competition from other airlines.

Total fourth-quarter operating revenue dipped $44 million, to about $9.5 billion. Unit revenue declined 2.7 percent.

Meanwhile, operating costs rose 8 percent in the quarter, including $475 million of new expense from the pilot contract, which included raises retroactive to Jan. 1, 2016.

For the full year, operating revenue declined 3 percent to $39.6 billion, while operating expense fell 1 percent. However, Delta said it expects unit revenue to turn positive this year after two years of declines.

The airline said business travel demand improved after the November election.

For now, the company plans to “remain conservative” and limit growth, Delta president Glen Hauenstein said. Delta plans for an up to 1 percent cut in flying in the first quarter of this year, compared with a year ago.

The 2016 profit result matched Delta’s projection in December, when Bastian said 2017 will be a “transition year.”

He said then that rising costs, including an expected increase in fuel prices, will “test the business model” for the airline.

Bastian also said he’s excited about the potential for increased investment in airport infrastructure under the incoming administration of President-elect Donald Trump.

In remarks to analysts and reporters Thursday, Bastian said Delta has “provided some input to the transition team.” He said he’s “excited about the opportunity” to present Delta’s case on competition with Middle East carriers and on enforcing trade deals, and discuss tax benefits and regulatory changes, calling it “a pretty good list of opportunities.”



Reader Comments ...


Next Up in Business

Georgia loses jobs in March, but unemployment rate steady
Georgia loses jobs in March, but unemployment rate steady

After two strong months, Georgia’s economy lost jobs in March. The number of jobs dropped by 7,400 during the month after adding 9,200 in January and 18,300 in February. The unemployment rate, which is calculated from a different, less extensive survey, held steady at 4.4 percent, according to a report issued Thursday by the Georgia Department...
Commuting brings challenges for Hartsfield-Jackson workers
Commuting brings challenges for Hartsfield-Jackson workers

As the largest job site in the state, some 63,000 people work at Hartsfield-Jackson International Airport. Although these employees help people travel around the world, it’s hard for some airport workers to just make it to to their jobs. Commuting comes with its hassles for workers all over the region. But the Atlanta airport presents some particularly...
Atlanta company raises all pay to $50k: quirky or smart?
Atlanta company raises all pay to $50k: quirky or smart?

Most smart employers want to pay enough to get the workers they need, but not more. Yet Rented.com, an Atlanta company with technology that fuels Airbnb, has raised the minimum pay for all employees to $50,000 and the company’s chief executive says the firm will save money in the long run by paying more. Wait, what? True, said CEO Andrew McConnell...
Kempner: Ignore call from boss? Georgia shifts on distracted driving
Kempner: Ignore call from boss? Georgia shifts on distracted driving

Georgia’s new distracted driving rules are confusing and watered down, but they give Georgians a legal excuse not to work in their cars and to ignore calls from bosses and customers. Some workaholics won’t take the hint. Not when they spend all that time brewing in Atlanta’s traffic. Not when plenty of employees and business owners...
Pilotless air taxis now flying openly in New Zealand
Pilotless air taxis now flying openly in New Zealand

Ride in a pilotless flying taxi, anyone? Larry Page’s Kitty Hawk has been testing such a vehicle in New Zealand since late last year and is coming out of stealth mode, the Silicon Valley company announced recently. “The dreamers from California met the visionaries from New Zealand,” Kitty Hawk said in a press release that lauds New...
More Stories