Falling value of fuel hedging deals left Delta Air Lines with a 4Q loss, but tops expectations
ATLANTA (AP) -- Delta Air Lines Inc. reported a fourth-quarter loss because falling oil prices led it to write down the value of its fuel-hedging contracts, but the airline's results were still better than Wall Street expected.
Its shares rose more than 4 percent in midday trading Tuesday.
Delta reported a $712 million loss after taking $1.4 billion in special charges, mostly hedging losses.
Excluding those items, Delta would have earned $649 million, or 78 cents per share. Analysts surveyed by Zacks Investment Research expected 75 cents per share in adjusted earnings.
Revenue rose 6 percent to $9.65 billion, also beating forecasts. Analysts expected $9.59 billion.
Delta, the nation's third-biggest airline company, said its fourth-quarter fuel expense fell $342 million because of lower prices and higher profit at its refinery. The company said it expects a $500 million fuel-price benefit in the first quarter of 2015, compared with the same period a year earlier.
Falling oil prices lowered the value of Delta's future fuel-hedging transactions by $1.2 billion. Hedging acts as insurance against rising oil prices, but it loses value when oil prices fall, as they have in recent months.
Delta hedges more aggressively than many airlines, partly because its fleet is relatively old and less fuel-efficient. American Airlines does not hedge and stands to benefit much more from the recent slide in oil prices.
The fourth-quarter loss equaled 86 cents per share. A year earlier, Delta earned $8.5 billion, or $9.89 per share, as results included tax benefit of $8 billion.
Its shares rose $1.99, or 4.3 percent, to $47.83 in midday trading.
Delta shares have decreased roughly 7 percent since the beginning of 2015 while the Standard & Poor's 500 index has fallen almost 2 percent. The stock has risen 48 percent in the last 12 months.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap ) using data from Zacks Investment Research. Access a Zacks stock report on DAL at http://www.zacks.com/ap/DAL
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