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Delta Q1 2018 pre-tax income drops to $676m

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Delta Air has announced $676 million pre-tax income for Q1 2018, a $104 million decrease from the March 2017 quarter. The drop according to a statement from the airline stemmed from record revenues, which were offset by higher fuel prices and other increased costs including a $44 million impact from severewinter weather.

“The Delta people delivered a strong March quarter, and our record revenue was a direct result of the great service andoperational reliability they provided for our customers. It’s an honor to recognize their hard work with $183 million toward our 2018 profit sharing,” said Ed Bastian, Delta’s chief executive officer.

“We have confidence in our plan to grow earnings in 2018 through top-line growth, improving our cost trajectory, and leveraging our international partnerships.” CROSSCHECKDelta’s adjusted operating revenue of 9.8 billion for the March quarter improved 8 percent, or $715 million versus the prior year. This revenue result marks a March quarter record for the company, and was driven by improvements across Delta’s business, including a 23 percent increase in cargo revenue and a $78 million increase in total loyalty revenue.

Delta’s Branded Fares initiative drove $421 million in premium up-sell revenue in the period, a 23 percent increase from the prior year. Total unit revenues excluding refinery sales (TRASM) increased 5.0 percent during the period, with foreign currency contributing just over 0.5 points of benefit.

This marks the fourth consecutive quarter of year-over-year growth, with allgeographic regions delivering positive results. “We are seeing Delta’s best revenue momentum since 2014, with positive domestic unit revenues, improvements in all ourinternational entities, strong demand for corporate travel and double-digit increases in our loyalty revenues,” said GlenHauenstein, Delta’s president.

With our solid pipeline of commercial initiatives, delivered with industry-leading Deltaservice, we expect to maintain this momentum and deliver total revenue growth of 4 to 6 percent for the full year. “We expect unit cost growth of 1 to 3 percent in the June quarter, as we lap prior year investments in our people and ourbusiness,” said Paul Jacobson, Delta’s chief financial officer.

“As we move through depreciation pressure from our fleet retirements and gain benefits from our upgauging and One Delta initiatives later in the year, we are on track for our 0 to 2percent full year unit cost target.” Adjusted non-operating expense was flat year-on-year for the March quarter as a $62 million improvement in pension expenses was offset by higher interest costs and the seasonality of joint venture partner earnings. The company expects2018 full-year adjusted non-operating expense to be $200-250 million lower than 2017, due to pension expense savings.

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