Back to top

Analyst Blog

Delta Air Lines Inc. (DAL - Analyst Report) reported fourth-quarter 2013 adjusted earnings of 65 cents per share, surpassing the Zacks Consensus Estimate of 63 cents. The bottom line improved 132.1% from the year-ago adjusted profit of 28 cents buoyed by operational efficiency, reduced fuel cost and slow growth of non-fuel expenses.

For full-year 2013, Delta posted earnings of $3.15 per share (ahead of our projection of $3.13 and up 71.0% year over year) on revenues of $37.8 billion (ahead of our $37.7 billion expectation and up 3.0% from the prior year).

Revenues increased 6% year over year to $9.08 billion in the reported quarter and was ahead of the Zacks Consensus Estimate of $9.03 billion. On an annualized basis, Passenger revenues grew 6% and Other revenues improved 3% from the prior-year quarter. However, Cargo revenues dipped 1.3%.

Operating Statistics

Airlines traffic, measured in billions of revenue passenger miles, went up 2% year over year to 46.2 billion. Capacity or available seat miles increased 3% from a year ago to 55.9 billion, while load factor (percentage of seats filled with passengers) declined 70 basis points year over year to 82.6%. Passenger revenue per available seat mile (PRASM) or unit revenue rose 3% year over year, led by a 4% increase in yield.

Operating Expenses

Total operating expenses, including special items, increased 8% year over year to $8,375 million, primarily due to aircraft maintenance and aircraft restructuring. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel cost, profit sharing and special items, crept up 1%.


At the end of 2013, the company had $3.8 billion in cash and short-term investments and net debt of $9.4 billion. The company has reduced its net debt by $7.5 billion since 2009.

The company generated operating cash flow of $1.2 billion in the fourth quarter while capital expenditures were $900 million.

Dividend and Share Repurchase

During the quarter, the company returned $201 million to its shareholders. It paid a dividend of 6 cents aggregating $51 million and repurchased 5.5 million shares totaling $150 million.


For the first quarter of 2014, the company expects a strong demand environment, capacity addition and a number of strategic initiatives to lead to solid margin expansion.

Delta expects operating margin in the range of 6–8% and consolidated unit cost, excluding fuel and profit sharing, to increase 0.5–1.5% year over year in the first quarter.

The estimated fuel price, including taxes and hedges, is approximately $2.97 to $3.02 per gallon. System capacity is expected to increase 2–3%.

Upcoming Earning Releases

Of the other stocks in the sector, United Continental Holdings Inc. (UAL - Analyst Report) Southwest Airlines Co. (LUV - Analyst Report) will release their fourth quarter results on Jan 23, while JetBlue Airways Corp. (JBLU - Analyst Report) will release the same on Jan 27. LUV and JBLU currently carry a Zacks Rank #1 (Strong Buy), while UAL carries a Zacks Rank #2 (Buy).

Our Take

We believe that the company will benefit from various strategic measures such as route launches, introduction of ancillary products, strong customer service and fleet revamping. However, a weak cargo business, competitive pressure and slow economic recovery keeps us sidelined on the stock. Delta currently carries a Zacks Rank #3 (Hold).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%