Quarterly loss reported as fuel prices take toll

Delta Air Lines said Wednesday that it recorded a $940 million loss in the first three months of the year, as thriving ticket sales were offset by high fuel prices.

But the airline, which had expected a loss for the quarter, said its March operations were profitable and that it had been able to pass some of the higher cost of fuel along to customers.

The company reported adjusted operating revenue of $8.2 billion, down 21% from the same quarter in 2019 and beating the forecast it issued at the start of the year. Delta said it expected revenue in the second quarter to be down only 3% to 7% from a similar period in 2019.

“With a strong rebound in demand as omicron faded, we returned to profitability in the month of March,” Ed Bastian, Delta’s chief executive officer, said in a statement, adding that the company was “successfully recapturing higher fuel prices.” On a conference call later with financial analysts, he said March was Delta’s best sales month ever, beating a record set in 2019 despite 10% fewer available seats.

The company’s shares were up more than 4% in Wednesday morning trading.

Delta said strong spring-break travel, office reopenings and the lifting of travel restrictions helped to improve demand in the first few months of the year.

Domestic corporate travel was about 70% recovered in March, compared with the same month in 2019. International business travel was about 50% restored. Delta also said revenue from sales of premium seats on domestic flights had fully recovered to 2019 levels last month.

However, higher jet fuel prices slowed that momentum. Delta reported paying an average price of $2.79 per gallon of fuel, up 33% from the last quarter of last year. That price included a saving of 7 cents per gallon thanks to the airline’s oil refinery outside Philadelphia. The refinery also collected nearly $1.2 billion in revenue from third-party sales.

On Wednesday, the airline said it expected the price of fuel to rise even higher, to between $3.20 and $3.35 per gallon. It expects seating capacity in the second quarter to be about 84% restored.

The industry started the year with widespread flight disruptions as winter storms and staffing shortages caused by the fast-spreading omicron variant of the coronavirus hampered its ability to handle the busy holiday season. At Delta, for example, about 8,000 employees — more than one in 10 — called in sick, the airline revealed in January. At the time, Bastian estimated that the variant had delayed the airline recovery by about 60 days.

Delta in January said it expected losses that month and in February, with a return to profitability in March. While Delta had expected a loss over the first three months of this year, it projected profits throughout the rest of the year.

March started off strong, with several airlines reporting betterthan-expected sales. But some of that improvement was dented by high fuel prices caused by Russia’s invasion of Ukraine and supply chain problems.