US carriers Delta Air Lines and US Airways Group turned in higher quarterly profits on Wednesday and indicated revenue trends looked to be improving following a weaker September. Delta's profit was a penny shy of analysts' average estimates, excluding special items, while US Airways topped estimates. Revenue at both carriers was softer in the quarter than analysts expected.
But Delta said unit revenue - a measure of pricing power and how full planes are - would likely rise 4 percent to 5 percent in October after a 3 percent increase in the third quarter. US Airways said the "revenue environment looks strong." Performance in unit revenue weakened at many US airlines toward the end of the third quarter, which is a traditionally strong period that usually benefits from some summer travel.
Given the September softness, the reports are "very much in line" with expected results, said Bill Swelbar, a research engineer at MIT's international center for air transportation. "I continue to be impressed by how the companies manage costs in a period of slow growth, which is a difficult thing to do." Delta said it would undertake cost-cutting moves over the coming year to hold down non-fuel unit expenses. "We are now implementing a $1 billion program of initiatives which will generate significant savings in the second half of 2013 and produce structural changes to the way we do business at Delta," Chief Financial Officer Paul Jacobson said in a memo to staff.
US carriers have merged, stopped flying unprofitable routes and raised ticket prices to recover from the 2008-09 downturn. Carriers have also cut back flying to match demand and created new revenue streams with baggage and food fees, moves that have helped keep profits coming in the face of volatile fuel prices.
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