ATLANTA – Delta Air Lines Inc., the nation’s third-largest carrier, cited a 5.5 percent gain in sales as it reported Wednesday that it swung to a profit in the second quarter, which saw it emerge from bankruptcy after shaving billions of dollars in costs.

The Atlanta-based company’s results beat Wall Street expectations when one-time items are excluded.

Also Wednesday, outgoing Chief Executive Gerald Grinstein told investors and analysts during a conference call that Delta’s board will likely choose his successor by the end of the summer, at which point he will retire. He had initially said he planned to leave soon after Delta emerged from Chapter 11, but later extended that timeline. He said during the call the board is taking a deliberative approach to finding his replacement “given the magnitude of this decision.”

The top internal candidates for CEO are Chief Financial Officer Ed Bastian and Chief Operating Officer James Whitehurst. No external candidates have been mentioned publicly.

Grinstein said during a conference call with reporters that Bastian and Whitehurst have not been distracted in their duties during the search.

“There may be more pins and needles on the outside than on the inside,” Grinstein said. “The company is functioning very well internally.”

Delta shares rose 18 cents to $21.37 in midday trading.

For the three months ending June 30, Delta said it recorded net income of $1.77 billion, or $4.49 a share, compared to a loss of $2.21 billion in the same period a year earlier. The corresponding per-share figure for the year-ago loss was not provided in Delta’s balance sheet.

Excluding reorganization and related one-time items, Delta said it had a profit of $274 million, or 70 cents a share, in the second quarter. On a comparable basis, analysts surveyed by Thomson Financial were expecting a profit of 59 cents a share.

The reorganization and related one-time items Delta accounted for in the second quarter of this year stemmed from $1.5 billion of income primarily due to the discharge of claims and liabilities in connection with its bankruptcy proceedings and the adoption of fresh-start reporting.

Revenue in the April-June quarter rose to $5 billion, compared to $4.74 billion recorded in the same period a year earlier.

At the end of the quarter, Delta had $3.7 billion in cash, cash equivalents and short-term investments, of which $3.4 billion was unrestricted. Delta also has an additional $1 billion in unrestricted liquidity available under its undrawn revolving credit facility.

Delta recorded roughly $40 million in cash gains on fuel hedge contracts settled during the quarter.

For the first six months of the year, Delta said its net income was $1.64 billion, compared to a loss of $4.28 billion for the same period a year earlier. Per-share figures were not given. Six-month revenue rose to $9.24 billion, compared to revenue of $8.54 billion in the same period a year earlier.

Grinstein said he was pleased by the results.

“We are focused on the future,” Grinstein said.

Delta entered Chapter 11 on Sept. 14, 2005. The company emerged on April 30.

In bankruptcy, Delta shed billions in costs and restructured the carrier’s operations. It also survived a hostile takeover bid by Tempe, Ariz.-based US Airways Group Inc.

Delta executives, faced with questions about a post-bankruptcy valuation below what they initially projected and below what US Airways offered for Delta, declined to speculate Wednesday about whether the airline would consider a merger with another carrier to increase shareholder value.

Bastian said during the analyst call that Delta is looking at “opportunities to enhance shareholder value,” though he wasn’t specific, adding, “The silence you hear from us is not wanting to get out in front of a new board. Don’t read or not read anything into that.”

Besides finding a new CEO, Delta’s board also must decide whether to sell or spin off regional feeder carrier Comair. The airline has not provided a specific timetable for that decision.

Bastian said during the analyst call that Comair will always play an important role at Delta either under its fold or “potentially as a contract carrier.” Later, in a call with reporters, he said “no decision about whether we should or shouldn’t” shed the Erlanger, Ky.-based company has been made.

On the Net:

Delta Air Lines Inc.: http://www.delta.com

A service of the Associated Press(AP)