Following the recent Boeing disaster, airlines across the world saw their stocks dip in response to the crash. However, most of these ended up bouncing back relatively quickly and some are reporting quite bullish earnings figures. Despite technical issues which saw major US airlines hit with a system-wide computer outrage yesterday, one major airline saw its shares jump significantly is it reported financial figures. Delta Air Lines surged several percent today as the company increased its earnings expectations going forward.
Delta told investors that it expected to earn between 85 cents to 95 cents per share during the first quarter, a significant increase from it’s previously expected 70 cents per share. This figure is well above what analyst on Wall Street expected as well. Additionally, non-fuel costs are less expensive than originally anticipated, and overall expects a 2 percent bump in first-quarter revenue.
“Delta expects to deliver March quarter results of approximately 7% top-line growth, margin expansion and $1.6 billion of shareholder returns. Total unit revenues are expected to grow approximately 2% as overall demand remains healthy, led by corporate volume. Record-setting operational performance in the Marth quarter drove approximately 1 point of additional capacity versus initial guidance,” read the investor update. “
The major airline also made some other announcements, such as signing a major credit-card contract renewal with American Express , which is anticipated to help bring in around $7 billion by 2023 for the airline, as opposed to the $3.4 in brought in 2018. Overall, the arrangement between the two companies is crucially important to the Delta SkyMiles credit card program and how lucrative it is for the airline. Delta also repurchased around $1.3 billion in stock at an average price of $50 a share.
Delta has previously been considered one of the best management airlines in the country. The airline is also relatively cheap considering it’s stock price, trading at around eight times projected earnings before today’s announcement in addition to its high 2.8 percent dividend, the highest among its peers. For these reasons, Delta has been seen as a highly attractive pick for value investors, with many analysts considering the airline a leader when it comes to corporate alliances, technology, and maintenance/repair efficiency. Back in March, Warren Buffet announced it increased its stake in delta by 5.4 million shares, and now owns 10.4 percent of the airline.
In response to the news, Delta Airlines jumped around 6 percent in Tuesday’s trading session. Other major airlines followed as well, with United and American jumping up 4.7 and 2.2 percent while a number of other smaller company’s like Spirit, JetBlue, Southwest Airlines and Alaska Air Group are increasing as well. Delta ended the day at $55.3 per share.
Delta Airlines Company Profile
Atlanta-based Delta Air Lines is one of the world’s largest airlines, flying to more than 325 destinations in 60 countries. Delta operates a hub-and-spoke system, where it gathers and distributes passengers across the globe through key locations in Atlanta, New York, Salt Lake City, Detroit, Seattle, and Minneapolis-St. Paul. Delta generated just over $41 billion in revenue during 2017 and operated a mainline fleet of 856 aircraft at year-end 2017. – Warrior Trading News