Atlanta’s Delta Air Lines (NYSE: DAL – $51.89) reported third quarter adjusted net profit of $1.3 billion for the third quarter, up 13% from a year earlier despite higher fuel costs and a $30 million hit from Hurricane Florence. Per share net was $1.80, up from $1.54 per share in the prior-year period and higher than the $1.74 Street estimate. Citing increased sales of premium tickets, total operating revenue rose to a new record for Delta, up 8% to $11.95 billion from $11.06 billion reported for the same period last year and nearly in line with consensus views.
Looking forward, Delta said it expects a 30% increase in fuel prices but expects revenue to continue to grow. Overall, it will increase flying by about 4 percent in the fourth quarter compared with a year ago. Management still appears confident that it will return to margin expansion by year-end. The company has already raised fares to account for a spike in oil prices, allowing it to offset a large portion of fuel cost increases. For the fourth quarter, the company expects earnings of $1.10 to $1.30 per share compared to Street estimates of $1.24. Full-year earnings per share should exceed $5.55 and the consensus for next year is $6.35. These shares look good for the long haul and sport a solid dividend yield of 2.8%.