Delta Air Lines posted a $1.2 billion net profit for the second quarter of 2017, down 21% from $1.5 billion in net income for 2Q 2016. The Atlanta-based airline reported $10.9 billion in operating revenue for the quarter, up 3.3% year-over-year (YOY).

“This was the best June quarter in Delta’s history … we grew our topline by 3% this quarter, the first year-on-year increase we’ve reported in two years,” Delta CEO Ed Bastian told analysts and reporters July 13. The airline reported an 18.8% operating margin for the quarter, down 4.4 points YOY.

“The quarter could have been even better,” Bastian said, as the airline absorbed a $125 million pre-tax loss from the operational disruption following severe storms that hit Atlanta in early April.

“While we can’t control the weather, we can improve our recovery,” Bastian said. “We’ve accelerated technology investments and implemented process improvements for the summer that incorporate what we learned from the April event.”

Delta canceled 4,000 flights following the April 5 storm as the airline grappled with crew displacement and operational recovery issues for several subsequent days.

“The June quarter marked Delta’s return to unit revenue growth after two-and-a-half years,” Delta president Glen Hauenstein said. In addition to the $261 million in passenger revenue growth, Delta reported a significant 11% YOY surge in cargo revenue during the second quarter, to $183 million, the first positive movement in Delta’s cargo unit since 2014, driven by increased freight and mail volumes. 

Delta’s second-quarter expenses totaled $8.7 billion; operating profit came in at $2 billion, down 16.3% from $2.4 billion in 2Q 2016.

Delta’s consolidated second-quarter traffic rose 2.1% year-over-year to 57.6 billion RPMs on a 0.4% decrease in capacity to 66.2 billon ASMs, producing a load factor of 86.9%, up 1.4 points YOY. Passenger yield was up 0.8% to 16.03 cents. PRASM increased 2.5% to 13.94 cents; TRASM increased 2.9% to 16.29 cents. Hauenstein noted “with three consecutive months of positive RASM (and it’s actually four), we’re going to hold Ed to his deal and we will no longer be reporting our monthly revenue results.”

“While 2017 is a transition period for Delta, we are encouraged by the improvement in unit revenues … fuel prices are lower and this gives us increasing confidence to drive margin expansion in the back half of the year,” Bastian said. “In each of the next three years we are targeting operating margins in the range of 16%-18%, EPS growth of 15% and $4.5 to $5.5 billion of free cash flow.”

As of June 30, Delta is reporting $1.8 billion in year-to-date net profit, down 26.7% from $2.5 billion at the 2016 half-year mark. Half-year operating revenue is $19.9 billion, up 1.2% YOY; half-year operating expenses total $16.9 billion, up 7.1% YOY. The airline’s six-month operating profit stands at $3.1 billion, down 22.3% YOY.

Delta took delivery of its first Airbus A350-900 July 13, which will be placed in service Oct. 30 on the Detroit-Tokyo Narita route. This is the first of five of the type Delta will take this year. Delta has a total of 25 A350-900s on order. The aircraft will feature Delta’s all-suite business-class product.

Mark Nensel