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Delta, CAL post gains
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July 19, 1999: 11:23 a.m. ET
Strong sales help Atlanta giant to post record net; Continental beats forecast
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NEW YORK (CNNfn) - Two of the largest U.S. airlines defied expectations of weak industry trends as Delta Air Lines posted record net earnings Monday and Continental Airlines beat Street forecasts, despite a fall in the last quarter.
Delta, the nation's third-largest carrier, reported a net profit of $364 million in its fiscal fourth quarter to June 30, compared to $362 million in the same period last year. Diluted earnings per share climbed to $2.40 from $2.26.
Continental, the fifth-largest major, reported a drop in net profit to $137 million in the second quarter to June 30 from $163 million last year. However, diluted earnings per share of $1.80 came in well above the consensus forecast of $1.73, though down from $2.06 in the same period last year.
Both results were ahead of analysts' forecasts at a time when the airline industry is starting to show signs of ending its recent five-year bull run of record profits as rising fuel costs put pressure on profits.
Delta's record earnings generated the most attention. "We were looking for $2.30 a share. The key thing is that revenue growth was stronger than expected," Candace Browning, airline analyst at Merrill Lynch, told CNNfn.com.
Delta (DAL) shares climbed 1-1/2 to 60-9/16 in morning trading Monday.
Fourth-quarter sales climbed 5.2 percent to $3.957 billion. For fiscal 1998-99, sales rose 5.1 percent to $14.711 billion while net profits climbed to $1.101 billion from $1.001 billion a year earlier. Diluted earnings per share for 1998-99 jumped to $7.20 from $6.34.
Delta noted that its passenger yield -- the revenue for each seat flown -- has been above the industry average for the last 13 months and stayed flat at 12.87 cents per revenue passenger mile in the latest quarter.
For the full year, Delta's yield dipped to 12.75 cents from 12.85 cents, though costs added just 1 cent to 8.89 cents per passenger mile.
Atlanta-based Delta last month firmed up its global alliance strategy when it signed up Air France for a broad-based strategic alliance.
Analysts said that Continental benefited from keeping capacity growth down, as revenue passenger traffic climbed 9.1 percent while the number of seats added rose by 8.6 percent. Second-quarter revenues grew 8 percent to $2.2 billion.
Continental's (CAL) B shares gained 1-1/2 at 40-1/16 in Monday morning trade.
Alaska Air (ALK), which signed a strategic pact with Continental earlier this year, was due to report second-quarter earnings later Monday. 
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