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Delta Air Posts Strong Results

Atlanta-based Delta Air Lines (NYSE: DAL – $57.70) profit and sales beat expectations with net income for the quarter of $572 million. Excluding non-recurring items, adjusted earnings per share came to $0.96, above the Street consensus of $0.88 and last year’s $0.32. Total operating revenue rose 8.3% to $10.25 billion, also beating estimates of $10.13 billion, amid a 7% rise in total passenger revenue and a 18% jump in other revenue. Load factor improved to 85.2% from 85.1%. Delta took a combined hit of $60 million from December’s power outage at Atlanta’s Hartsfield-Jackson Airport and Winter Storm Benji. Year over year, Delta’s costs, excluding fuel and special items, increased 5.6%, driven by higher labor expenses and accelerated depreciation from aircraft retirements. Nonetheless . . .

       . . . management expects stronger-than-expected revenue and good unit revenue momentum for the new year and thus raised 2018 guidance also aided by benefits of tax reform. Delta now estimates first-quarter total unit revenue growth of 2.5% to 4.5%. Analysts have the company pegged to earn $5.94 this year as compared to the recently released 2017 full-year earnings of $4.93 and $6.72 is possible for next year. Delta shares, up nearly 3% on the news, offer compelling value and solid long-term growth prospects and can be retained for those willing to assume some risk in the volatile airline industry.


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