Breaking News
0

Rising fares push Delta past profit estimates

Stock MarketsJul 12, 2018 08:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Delta Air Lines Boeing 737 plane arrives in Salt Lake City

By Arunima Banerjee

(Reuters) - Delta Air Lines Inc (N:DAL) topped estimates for quarterly profit and operating revenue Thursday as a rise in average fares trumped an almost 40 percent surge in fuel costs, pushing shares higher.

Delta said it flew 3.2 percent more paying customers in the quarter and both average fares and adjusted total unit revenue - a closely-watched industry measure which compares sales with flight capacity - increased 4.6 percent.

Given the additional fuel costs, however, the airline also said that it planned to cut less profitable flights in its new schedule for the second half of this year.

"With strong revenue momentum, an improving cost trajectory, and a reduction of 50-100 bps (basis points) of underperforming capacity from our fall schedule, we have positioned Delta to return to margin expansion by year end," Chief Executive Officer Ed Bastian said.

As developing middle classes in the world's big emerging economies including China and India fly more, global air passenger traffic has risen every month this year.

While that has bolstered airlines across the board, they are also facing the fallout of a more than doubling of crude oil prices since early 2016.

The Atlanta-based airline reiterated it expected its fuel bill for the year to rise by $2 billion after a 38.8 percent jump in fuel costs in the second quarter.

Those costs prompted Delta to cut its full-year earnings forecast to a range of $5.35 to $5.70 per share from $6.35 to $6.70 per share, months after bigger rival American Airlines Group Inc (O:AAL) also cut its full-year outlook.

Delta expects unit revenue to grow 3.5-5.5 percent in the third quarter. The company's board approved a 15 percent hike in dividend for the third quarter to 35 cents.

On an adjusted basis, Delta earned $1.77 per share in the second quarter, beating an estimate of $1.72, according to Thomson Reuters I/B/E/S.

Delta's total operating revenue rose 9.6 percent to $11.78 billion in the quarter, beating analysts' estimate of $11.72 billion.

Up to Wednesday's close, the company's stock had fallen 11 percent this year.

Rising fares push Delta past profit estimates
 

Recommended

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email