Hedging drives Delta Air Lines to 2Q loss

  • Follow Business

MINNEAPOLIS — For an airline, the whole idea of fuel hedging is to protect against big run-ups in oil prices. It didn’t work out that way for Delta Air Lines Inc.

Its bets on oil prices went the wrong way, pushing it to a second-quarter loss of $168 million, or 20 cents per share. During the same period last year, Delta had net income of $198 million, or 23 cents per share.

The airline said Wednesday that it lost $561 million on wrong oil price bets that haven’t settled yet. It also had $171 million in severance costs from voluntary staff reductions.

If not for special items, Delta would have earned $586 million for the quarter, or 69 cents per share. Analysts surveyed by FactSet expected 68 cents per share.

Revenue rose 6 percent to $9.73 billion, better than analysts had expected.

Delta plans to cut third-quarter flying by 1 to 3 percent compared to the same period last year. The airline expects “strong profitability” in the third quarter, CEO Richard Anderson said in a statement.

Delta said cargo revenue fell 1 percent as prices fell, even though it carried more goods.

Delta would have paid $3.21 per gallon for fuel during the quarter if not for the bad oil price bets. But because of those bets, it paid the equivalent of $3.95 per gallon.


Top headlines

Paine president resigns

George C. Bradley resigned as president of the embattled Paine College on Tuesday as the institution continues efforts to maintain its accreditation after several years of financial mismanagement ...
Search Augusta jobs