Delta Air Lines (NYSE: DAL – $53.07) beat the consensus forecast in its third-quarter earnings and guided expectations for passenger unit revenue in the current period higher than a year earlier. The company reported third quarter adjusted earnings of $1.57 per share, ahead of the $1.53 average estimate from analysts. although lower than the year earlier $1.70. Total revenue rose 5.5% from a year ago to $11.06 billion, also coming in above the $11.03 billion consensus. Pre-tax income included a $120 million reduction from disruptions following Hurricane Irma that hit the Caribbean, Florida, Georgia and, specifically, Delta’s hub in Atlanta. The airline indicated that all four geographic regions served are expected to show positive year-over-year passenger revenue per available seat by the end of the year. For the fourth quarter, Delta expects a 2% to 4% increase in passenger unit revenue year-on-year.
Delta’s relatively low price-to-earnings multiple and the company’s business model changes over the past five years have made it more insulated from a drop in demand. Also, Delta’s fare structure is appealing and could further attract corporate customers. For patient investors willing to venture into this competitive and cyclical industry, the long-term rewards for DAL out way the risks.