Delta saved $5.1 billion last year on its single biggest expense

Shares of Delta Air Lines jumped more than 4% Tuesday after the company swung to a profit in the fourth-quarter.
Adjusted earnings jumped 51% to $926 million, the company said.
It wasn’t all good news. The fourth-quarter results were shy of analysts expectations, with the company blaming volatile currency markets for a drop in revenue.

The Atlanta-based airline expects the foreign-currency pressures to continue in early 2016 — hitting revenue by as much as 4.5% in the first quarter.

But investors were clearly focused on the good news. Fuel is Delta’s single largest expense and the plunge in crude oil prices recently is having an obvious impact.

Delta said it saved $5.1 billion due to lower fuel costs in 2015 — a huge amount given that it only reported full year profits of $4.5 billion. It could cut another $3 billion off costs this year,

Bastian told the press that lower fuel prices could help Delta save as much as $3 billion this year, the company’s president Ed Bastian said in the earnings statement.

For now, there’s little reason to expect fuel prices to climb. In its latest report, the International Energy Agency said it expects the addition of Iran’s 600,000 barrels a day of production will further lower already depressed oil prices.

In 2015, Delta returned $2.6 billion to shareholders in the form of $360 million in dividends and $2.2 billion in share repurchases.

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