Delta Turns Record-Setting Quarter Despite Challenges

First quarter pre-tax profit increased to $1.43 billion while unit revenue declined.

Despite challenges with international currencies and terrorism abroad, Delta Air Lines claims the first quarter of 2016 was their strongest over the past three years. In a news release on their website, the airline announced a pre-tax profit of $1.53 billion, over 100 percent more than their previous first quarter earnings.

“We have started 2016 with tremendous momentum,” Ed Bastian, incoming chief executive of the Atlanta-based carrier, said in a press release. “With these results, the Delta people have proven again that they are the very best in the industry.”

Although overall pre-tax profit was strong, Delta did face certain unique challenges in the opening months of 2016. While passenger revenue on mainline aircraft increased, revenue on regional carriers decreased over four percent compared to the previous year.

Overall, total revenue dropped by 1.5 percent in the first quarter, which is attributed to a “volatile fuel environment and global economic uncertainty.” In addition, the airline estimates they lost $5 million due to the terrorist attack and subsequent closure of Brussels Airport for days. As a positive, the carrier credited certain programs for their overall positive operation, including “Branded Fares and the American Express partnership.”

The record-setting pre-tax profit comes as the airlines prepare for a busy spring and summer season, which comes with a number of challenges of its own. The airline projects fuel prices will increase to an average of around $1.50, while passenger unit revenue will drop as much as four percent. In addition, it is unclear how travelers will react to the threats of Zika, terrorism, or how foreign travelers will book due to the strong American dollar around the world. Delta is projecting an operating margin between 21 and 23 percent in the next quarter.

Delta is the first of the three legacy American carriers to announce their first quarter profits in 2016. American Airlines will announce their profits on April 22, while United Airlines will release their quarterly profits on April 20.

[Photo: Charlie Riedel / Associated Press]