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UPDATE 2-Delta posts loss on charges for fuel hedge contracts
July 25, 2012 / 12:12 PM / 5 years ago

UPDATE 2-Delta posts loss on charges for fuel hedge contracts

* Q2 adj earnings/share 69 cents vs estimate 68 cents

* Profit seen for current quarter (Adds share activity, analyst comment)

July 25 (Reuters) - Delta Air Lines Inc reported a quarterly loss on Wednesday as it took $561 million in charges for fuel hedge contracts, but the company forecast a profit for the current period.

The company reported a second-quarter net loss of $168 million, or 20 cents a share, compared with a year-earlier profit of $198 million, or 23 cents a share.

Special items, which also included $171 million in severance costs for voluntary buyouts, came to $754 million in the quarter.

Excluding items, earnings were 69 cents a share. Analysts on average expected 68 cents, according to Thomson Reuters I/B/E/S.

Operating revenue rose 6 percent to $9.73 billion from $9.68 billion expected by analysts. Passenger unit revenue, an important industry measure, increased 8.5 percent.

Atlanta-based Delta, the second largest U.S. carrier behind United Continental Holdings Inc, has cut routes to less-profitable markets, retired planes that are less fuel-efficient, and consolidated facilities to reduce costs.

But in a note to clients, UBS analyst Kevin Crissey cited concern about Delta’s cost trends. Unit costs, excluding fuel, are forecast to rise 5 percent to 6 percent in the current period, he said.

This year, Delta expanded flights at New York’s LaGuardia Airport, positioning itself to gain more business travelers, as a result of a swap of takeoff and landing slots with US Airways Group Inc in Washington’s Reagan National Airport.

Delta also completed the purchase of a Pennsylvania oil refinery, becoming the first airline to make such a move in a bid to gain more control over fuel costs.

Shares of Delta were unchanged at $9.33 in morning trading. The stock has risen about 15 percent this year. (Reporting by Karen Jacobs in Atlanta; Editing by Lisa Von Ahn and Jeffrey Benkoe)

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