Storm costs Delta Air Lines $125 million after 4,000 flights cancelled

Storm costs Delta Air Lines $125 million after 4,000 flights cancelled

Severe storms that grounded 4,000 Delta Air Lines flights over five days at its Atlanta hub is expected to cost the carrier $125 million.

The estimate emerged as the airline blamed 52% higher fuel prices as contributing to a $713 million fall in pre-tax profits to $847 million in the three months to the end of March over the same period last year.

The bad weather in Atlanta from last Wednesday caused “significant disruptions” to Delta’s operations, with the airline only returning to normal operations on Sunday.

“Delta currently estimates the storm will reduce its June quarter pre-tax income by $125 million,” the carrier said.

CEO Ed Bastian said: “We hold ourselves to a high standard and we apologise to all of our customers who were impacted by last week’s events.

“I also want to thank the Delta people for working through some incredibly tough conditions to take care of our customers and reset our operation. They proved again they are the best in the business.”

Reviewing performance over the first three months of the year, he said: “Despite fuel price pressures, the Delta people once again delivered solid results across the board, with double digit operating margins, strong improvements in customer satisfaction, and progress on our international expansion with the closing of our Aeroméxico transaction.

“Producing these results in our toughest quarter of the year shows not only how far we’ve come, but also that we have more opportunity in front of us to continue building a better airline for our employees, customers, and owners.”

Quarterly operating revenue was down $103 million year-on-year, including $20 million of lower currency hedge gains. Passenger unit revenues declined 0.5% on 0.5% lower capacity.

Delta president Glen Hauenstein said: “March marked the first month of positive passenger unit revenues since November 2015 and we are encouraged by the current fare and demand trends across the network.

“We expect June quarter passenger unit revenues to increase one to three percent and remain positive throughout the year.

“However, we will keep our full year capacity growth capped at one percent to support this unit revenue momentum and the company’s return to margin expansion.”

Delta completed a deal for an additional 32% stake in Aeroméxico for $620 million in the quarter. Delta now owns more than 36% of the outstanding shares in the Mexican carrier and has options to acquire an additional 13%.

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