Delta Air Lines
) reported second-quarter 2013 adjusted earnings of 98 cents,
surpassing the Zacks Consensus Estimate of 95 cents. The results
also improved considerably from the year-ago adjusted earnings of
69 cents. The company's performance was buoyed by strong sales
along with operational efficiency and growing demand.
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Revenues remained flat year over year at $9.70 billion in the
reported quarter but fell short of the Zacks Consensus Estimate
of $9.83 billion. On an annualized basis, Passenger revenues also
grew 1%, while Other revenues dropped 6% from the prior-year
quarter. Cargo revenues also decreased 11%.
Airlines traffic, measured in billions of revenue passenger
miles, increased 1% year over year to 50.8 billion. Capacity or
available seat miles also increased 1% to 59.9 billion, while
load factor (percentage of seats filled with passengers) dropped
30 basis points year over year to 84.8%. Passenger revenue per
available seat mile (PRASM) or unit revenue was flat year over
year, with 0.2% increase in yield.
Total operating expenses, including special items, decreased 8%
year over year to $8.79 million, primarily due to cost-saving
measures. Consolidated unit cost or cost per available seat mile
(CASM), excluding fuel cost, profit sharing and special items,
crept up 2.5%.
Average fuel price for Delta was $3.03 per gallon and total fuel
expenses decreased $710 million year over year due to reducing
fuel costs and less prior-year hedge loss.
At the end of the second quarter, the company had $3.9 billion in
cash and short-term investments and $1.8 billion in undrawn
revolving credit facilities, netting $5.7 billion in unrestricted
liquidity. Net debt at quarter end was $10.2 billion. Delta
generated operating cash flow of $1.3 billion in the quarter,
while capital expenditures were $704 million. Free cash flow was
Delta initiated a quarterly dividend payout policy of 6 cents per
share payable on Sep 10, to shareholders of record as of Aug 9.
Further, management announced a $500 million share repurchase
program that will be completed by mid 2016.
For the third quarter of 2013, Delta Air Lines expects operating
margin of 11-13% and consolidated unit cost, excluding fuel and
profit sharing, to increase 0-2% year over year. Additionally,
the company expects domestic flying to increase 1-3% year over
year and international flying capacity to increase 2-4% year over
The estimated fuel price, including taxes and hedges, is
approximately between $3.05 and $3.10 per gallon.
Other Airline Stocks
Of the other stocks in the sector,
JetBlue Airways Corp.
) will release its second-quarter financial results on Jul 30.
Delta - the second largest airline company in U.S. after
United Continental Holdings Inc.
) - currently holds a Zacks Rank #3, implying a Hold rating.
We appreciate Delta's constant endeavors to expand its
operational base through the introduction of services
interlinking various domestic and international spots. Recently,
the airline launched a daily nonstop service between Seattle and
London. Delta will commence the service from Mar 29, 2014,
The Boeing Company
) 210-seat 767-300ER jet.