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MarketScreener Homepage  >  Equities  >  Nyse  >  Delta Air Lines    DAL

DELTA AIR LINES (DAL)
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Delta profit tops estimates as cost controls help offset fuel surge

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10/11/2018 | 06:00pm CEST
FILE PHOTO: Passengers check in at a counter of Delta Air Lines in Mexico City

(Reuters) - Delta Air Lines Inc said on Thursday it sees a return to margin growth next year as it posted a estimate-beating rise in quarterly profit on strong demand and tight cost controls, sending shares higher.

With oil prices hovering near four-year highs, Delta and peers such as American Airlines Group Inc and Southwest Airlines Co are facing a surge in fuel costs that is weighing on profits, even as demand for air travel is strong.

To combat that headwind, airlines have increased ticket prices, used more fuel-efficient planes and hiked baggage fees.

"Our commercial momentum and improved cost trajectory give us confidence that we are on a path to deliver continued top-line growth and expand margins as we move into 2019," Delta Chief Executive Officer Ed Bastian said.

Net income rose to $1.31 billion, or $1.91 per share, in the third quarter, from $1.16 billion, or $1.61 per share, a year earlier. The company took a $30 million charge from Hurricane Florence last month in the quarter, but said the impact from Hurricane Michael has been minimal.

On an adjusted basis, Atlanta-based Delta earned $1.80 per share, beating the average analyst estimate of $1.74, according to Refinitiv data.

Adjusted operating revenue rose 8 percent to an all-time third-quarter record $11.8 billion, driven by a rise in domestic and transatlantic revenues.

Corporate travel remained strong in the United States and demand should not be hurt by rising U.S. interest rates, the carrier said.

Shares climbed 3.4 percent to $51.42, underpinning gains on the Dow Jones US Airlines index <.DJUSAR> and S&P Composite 1500 Airlines index <.SPCOMAIR>.

J.P. Morgan said in a note to investors that Delta's outlook left the door open for fourth-quarter margin expansion and higher margins in 2019, which it sees as "critical" for the stock performance.

Delta said it would keep any growth in nonfuel unit costs below 2 percent next year.

The company expects overall capacity to rise about 3 percent in 2019, and said it is replacing older narrowbody aircraft with larger, more efficient Airbus SE A321s and Boeing Co 737-900s through 2020. This will provide a nearly 15 percent improvement in seat cost, executives said.

Delta said it expects earnings of $1.10 to $1.30 per share in the fourth quarter, in line with estimates, and total annual revenue growth of about 8 percent versus 2017.

(Reporting by Tracy Rucinski in Chicago and Ankit Ajmera in Bengaluru; Editing by Anil D'Silva and Jeffrey Benkoe)

By Tracy Rucinski and Ankit Ajmera

Stocks mentioned in the article
ChangeLast1st jan.
AIRBUS SE -1.54% 99.31 Real-time Quote.17.84%
AMERICAN AIRLINES GROUP -4.50% 32.06 Delayed Quote.-38.92%
BOEING COMPANY (THE) -1.68% 359.35 Delayed Quote.22.11%
DELTA AIR LINES -2.15% 53.13 Delayed Quote.-7.43%
SOUTHWEST AIRLINES -2.09% 57.96 Delayed Quote.-11.87%
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Financials ($)
Sales 2018 44 514 M
EBIT 2018 5 326 M
Net income 2018 3 895 M
Debt 2018 7 423 M
Yield 2018 2,36%
P/E ratio 2018 9,65
P/E ratio 2019 8,37
EV / Sales 2018 1,00x
EV / Sales 2019 0,92x
Capitalization 37 229 M
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Technical analysis trends DELTA AIR LINES
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TrendsNeutralNeutralNeutral
Income Statement Evolution
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Mean consensus BUY
Number of Analysts 17
Average target price 67,8 $
Spread / Average Target 25%
EPS Revisions
Managers
NameTitle
Edward Herman Bastian Chief Executive Officer & Non-Independent Director
Glen William Hauenstein President
Francis S. Blake Non-Executive Chairman
Wayne Gilbert West Chief Operating Officer & Senior Executive VP
Paul A. Jacobson Chief Financial Officer & Executive Vice President
Sector and Competitors
1st jan.Capitalization (M$)
DELTA AIR LINES-7.43%37 229
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INTERNATIONAL CONSOLIDATED AIRLINES GROUP-10.48%15 225
RYANAIR HOLDINGS PLC-22.12%14 808
AIR CHINA LTD.-42.21%14 010
JAPAN AIRLINES CO LTD-12.40%11 971