Delta’s profit tumbles on higher costs; passenger unit revenue rises

Delta Air Lines Inc (DAL.N) reported a 21 percent drop in second-quarter profit because of sharply higher labor and fuel costs, despite higher passenger unit revenue, sending its shares down 2 percent.The stock drop reversed positive gains earlier in the week driven by investor optimism about improving passenger unit revenue in the sector. The closely-watched metric measures sales relative to flight capacity.Breaking a losing streak that has plagued much of the industry for the last two years, Delta posted a 2.5 percent increase in passenger unit revenue, but that performance was overshadowed by the carrier’s poorer-than-expected bottom line.While positive unit growth is a bright spot for investors, stocks were slightly down sector-wide on Delta’s results. The cost of fuel and mounting labor expenses, prompted in large part by renegotiated contracts with carriers’ pilots, flight attendants and mechanics unions, added a sobering drag on an otherwise uplifting industry outlook on passenger unit revenue.

Source: Civil Aviation Authority, Qatar