Delta Air Lines
) reported first-quarter 2013 adjusted earnings of 10 cents,
surpassing the Zacks Consensus Estimate of 7 cents. The results
also improved considerably from the year-ago adjusted loss of 5
DELTA AIR LINES (DAL): Free Stock Analysis
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
SOUTHWEST AIR (LUV): Free Stock Analysis
UNITED CONT HLD (UAL): Free Stock Analysis
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Strategic expansion measures along with operational efficiency
and better products and services aided the company to deliver an
Revenues nudged up 1% year over year to $8.50 billion in the
reported quarter but fell short of the Zacks Consensus Estimate
of $8.51 billion. On an annualized basis, Passenger revenues also
grew 1%, while Other revenues dropped 1% from the prior-year
quarter. Cargo revenues also dipped 2%.
Airlines traffic, measured in billions of revenue passenger
miles, dropped 1% year over year to 43.1 billion. Capacity or
available seat miles fell 3% to 53.0 billion, while load factor
(percentage of seats filled with passengers) grew 150 basis
points year over year to 81.2%. Passenger revenue per available
seat mile (PRASM) or unit revenue rose 4% year over year, led by
a 2% increase in yield.
Total operating expenses, including special items, increased 3%
year over year to $8.28 million, primarily due to higher landing
fees, rents and salaries. Consolidated unit cost or cost per
available seat mile (CASM), excluding fuel cost, profit sharing
and special items, crept up 5%.
Average fuel price for Delta was $3.24 per gallon and total fuel
expenses dropped $78 million year-over-year due to reducing fuel
costs and less usage.
At the end of the first quarter, the company had $3.64 billion in
cash and short-term investments and $1.8 billion in undrawn
revolving credit facilities, netting $5.44 billion in
unrestricted liquidity. Total debt and capital leases were $12.31
Delta generated operating cash flow of $1.1 billion in the first
quarter while capital expenditures were $650 million. Free cash
flow stood at $457 million.
For the second quarter of 2013, Delta Air Lines expects operating
margin of 9-11% and consolidated unit cost, excluding fuel and
profit sharing, to grow 4.5-5.5% year over year. Additionally,
the company expects domestic flying to increase 1-2% year over
year and international flying capacity to remain flat to 1% down
year over year.
The estimated fuel price, including taxes and hedges, is
approximately in between $2.95 and $3.00 per gallon.
Other Airline Stocks
Of the other stocks in the sector,
Southwest Airlines Co.
JetBlue Airways Corp.
) will release their first quarter financial results on Apr 25.
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
believe that the company is progressing well on improving
ancillary revenues by including new services under its hood as
well as introducing products, which are enhancing its value and