ATLANTA — Delta Air Lines lost $1 billion in the second quarter, after recording $1.2 billion in special charges for write-downs, severance and closing of some facilities at airports.
Excluding the special items, Delta reported a $137 million profit, or 35 cents per share, despite a more than $1 billion increase in the cost of fuel compared with a year earlier. A year earlier, Delta had a $274 million profit, excluding special items.
Delta said recently it now expects its proposed merger with Eagan, Minn.-based Northwest will cost about $600 million over three years, instead of up to $1 billion as Delta had said when the merger was announced. The company also anticipates the deal will generate $500 million in additional revenues or cost savings in 2009, and about $2 billion in additional revenues or cost savings by 2012, up from $1 billion Delta had previously estimated.
Delta expects to complete its acquisition of Northwest by the end of the year, pending shareholder and regulatory approval. The airline expects customers will still book flights separately for each airline because it could take 12 to 24 months to integrate reservation systems.
Delta also said it plans to take more regional aircraft out of its system, now expecting to remove about 100 of the small airliners by the end of the year instead of the 60 to 70 it had previously planned to cut.
The airline's $1 billion net loss amounted to $2.64 per share, as the airline dealt with "unprecedented fuel prices," compared with a $1.6 billion profit a year earlier, including accounting adjustments related to its emergence from Chapter 11. The $1.2 billion in special charges includes a $1.1 billion non-cash charge for the write-down of goodwill and other items to reflect the lower market value of the airline amid high fuel costs.
Delta president Ed Bastian said in a written statement that the company mitigated nearly 80 percent of the impact of higher fuel costs. The carrier has increased revenue with growth in international flights, cargo and additional passenger fees, while working on cutting costs.
"It is no fluke that we reported a profit this quarter, excluding special charges, when our network competitors are not forecasted to do so," Delta president Ed Bastian wrote in a memo to employees. "We have led the industry — doing more at a faster pace — and now you are seeing the results of your efforts."
The only other major U.S. airline expected to report a profit for the quarter is Dallas-based Southwest Airlines.
Delta had $5.5 billion in operating revenue in the quarter ended June 30, up from $5 billion in the year-ago quarter. Its operating expenses totaled $6.6 billion, up from $4.5 billion a year earlier.
Although Delta has been adding international flights to increase revenue, "the softening U.S. economy and the ripple effect on the global economy are probably going to make that not as robust as it has been in the past couple of years," said Glen Hauenstein, Delta's executive vice president of network planning and revenue management.
In Atlanta, Delta is adding capacity in markets where it competes with AirTran, which is based in Orlando, Fla., and has its largest hub in Atlanta.
"We are seeing a surge of interest in demand in Atlanta," Bastian said.
Kelly Yamanouchi writes for The Atlanta Journal-Constitution. E-mail: kyamanouchi AT ajc.com.