MINNEAPOLIS - Delta Air Lines Inc. said Tuesday that its fourth-quarter profit was nearly wiped out by Superstorm Sandy and special charges.
The storm forced airlines to cancel more than 20,000 flights. The impact was bigger at Delta because Sandy also slowed down operations at its new oil refinery near Philadelphia.
Delta's goal in restarting the refinery was to maximize jet fuel production and reduce its fuel bill. But Sandy slowed the refinery's restart. The refinery lost $63 million for the quarter and added 7 cents per gallon to the price of Delta's jet fuel. Delta said it expects the refinery to be profitable in the current quarter.
Delta said Sandy cut $100 million from its fourth-quarter profit. It recorded another $231 million in special items. What was left was net income for the quarter of $7 million, or a penny per share. During the same period last year Delta earned $425 million, or 51 cents per share.
Without special items, earnings would have been $238 million, or 28 cents per share.
Revenue rose 2 per cent to $8.6 billion. Both the adjusted profit and the revenue were slightly better than expected by analysts surveyed by FactSet.
Managers said on a conference call that they're focused on improving profit margins. Delta also said it expects lower fuel prices in the first quarter. Delta has said that it wants to look into using crude oil from North Dakota at the refinery, which currently uses oil that arrives by ship. The refinery will get a shipment of North Dakota oil this quarter as a test, said Chief Financial Officer Paul Jacobson.
J.P. Morgan analyst Jamie Baker raised his first-quarter profit estimate, citing lower fuel prices and strong travel demand.
Shares of Delta, based in Atlanta, rose 40 cents, or 2.9 per cent, to close at $14.01. During the day they got as high as $14.15. They hadn't closed above $14 since November of 2010.
Delta's 2012 profit rose 18 per cent to $1 billion, or $1.19 per share. In 2011 it earned $854 million, or $1.01 per share. Full-year revenue rose 4 per cent to $36.67 billion.
For all of 2012, capacity was down 2 per cent, even though traffic was unchanged.
Delta said it would cut first-quarter flying capacity by 2 per cent to 4 per cent. Airlines have been trying to keep a lid on growth so they can charge more for the seats that remain.
Less flying has meant fewer employees. Delta's headcount shrank 6 per cent last year to the equivalent of 73,561 workers.