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Delta Air Lines (DAL) Stock Down 0.56% on Bearish Q3 View
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Shares of Delta Air Lines, Inc. (DAL - Free Report) fell 0.56% on Sep 14, closing the trading session at $39.33. The downside was due to the unfavorable guidance provided by DAL for the third quarter of 2023 due to high fuel prices and expenses related to non-fuel unit costs.
For third-quarter 2023, Delta now anticipates average fuel cost per gallon in the band of $2.75-$2.90 band (prior view: $2.50-$2.70). With fuel expenses being a significant input cost for the aviation space, the uptick in oil prices does not bode well for airlines.
Apart from rising fuel expenses, DAL is also burdened with expenses related to non-fuel unit costs. Non-fuel unit cost or cost per available seat mile (CASM: adjusted) for the September quarter is now expected to increase 1-2% (earlier estimate was a 1-3% decline) from third-quarter 2022 actuals. The uptick in non-fuel unit costs is due to higher-than-expected maintenance costs.
DAL now anticipates third-quarter 2023 adjusted earnings in the range of $1.85-$2.05 per share (prior view: $2.20-$2.50). The Zacks Consensus Estimate is currently pegged at $2.37 per share.
Third-quarter revenue (adjusted) growth is anticipated to be within the upper half of the prior guidance of 11-14% growth. The operating margin is expected to be around 13% (prior view: mid-teens). For third-quarter 2023, the carrier continues to expect capacity to increase 16% from third-quarter 2022 actuals.
Total revenue per available seat mile is anticipated to decline 2-3%from third-quarter 2022 actuals (earlier estimate was a 2-4% decline).
DAL is reaffirming its 2023 earnings (on an adjusted basis) in the range of $6-$7 per share.
Delta is not the only airline to increase projections for third-quarter 2023 fuel price per gallon. United Airlines (UAL - Free Report) ,Southwest Airlines (LUV - Free Report) , Alaska Air Group (ALK - Free Report) and American Airlines (AAL - Free Report) increased their fuel cost per gallon projections for the third quarter of 2023. United Airlines now expects the fuel cost per gallon in the $2.95-$3.05 band (the earlier guidance was in the $2.5-$2.8 range).
Southwest Airlines now expects the fuel cost per gallon in the $2.7-$2.8 band (the earlier guidance was in the $2.55-$2.65 range). Operating revenue per available seat mile for the third quarter of 2023 is now expected to decline in the 5-7% band from third-quarter 2022 actuals (the earlier projection was for a 3-7% decline).
Alaska Air now expects the fuel cost per gallon in the $3.15-$3.25 band (the earlier guidance was in the $2.7-$2.8 range). Due to high fuel costs, the third-quarter adjusted pre-tax margin is now expected in the 10-12% range (earlier guidance was 14-16%). Total revenues are now expected to increase in the 1-2% range from third-quarter 2022 actuals (the earlier projection was for a 0-3% increase).
American Airlines now anticipates third-quarter 2023 average fuel cost per gallon in the band of $2.90-$3.00 band (prior view: $2.55-$2.65 band). Apart from rising fuel expenses, AAL is also burdened with the retroactive pay expense of almost $230 million. Due to high fuel and labor expenses, the third-quarter adjusted operating margin is now anticipated in the range of 4%-5% (prior view: 8-10%). AALnow anticipates third-quarter 2023 earnings in the range of $0.20-$0.30 per share (prior view: $0.85-$0.95).
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Delta Air Lines (DAL) Stock Down 0.56% on Bearish Q3 View
Shares of Delta Air Lines, Inc. (DAL - Free Report) fell 0.56% on Sep 14, closing the trading session at $39.33. The downside was due to the unfavorable guidance provided by DAL for the third quarter of 2023 due to high fuel prices and expenses related to non-fuel unit costs.
For third-quarter 2023, Delta now anticipates average fuel cost per gallon in the band of $2.75-$2.90 band (prior view: $2.50-$2.70). With fuel expenses being a significant input cost for the aviation space, the uptick in oil prices does not bode well for airlines.
Apart from rising fuel expenses, DAL is also burdened with expenses related to non-fuel unit costs. Non-fuel unit cost or cost per available seat mile (CASM: adjusted) for the September quarter is now expected to increase 1-2% (earlier estimate was a 1-3% decline) from third-quarter 2022 actuals. The uptick in non-fuel unit costs is due to higher-than-expected maintenance costs.
DAL now anticipates third-quarter 2023 adjusted earnings in the range of $1.85-$2.05 per share (prior view: $2.20-$2.50). The Zacks Consensus Estimate is currently pegged at $2.37 per share.
Third-quarter revenue (adjusted) growth is anticipated to be within the upper half of the prior guidance of 11-14% growth. The operating margin is expected to be around 13% (prior view: mid-teens). For third-quarter 2023, the carrier continues to expect capacity to increase 16% from third-quarter 2022 actuals.
Total revenue per available seat mile is anticipated to decline 2-3%from third-quarter 2022 actuals (earlier estimate was a 2-4% decline).
DAL is reaffirming its 2023 earnings (on an adjusted basis) in the range of $6-$7 per share.
Delta currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Delta is not the only airline to increase projections for third-quarter 2023 fuel price per gallon. United Airlines (UAL - Free Report) ,Southwest Airlines (LUV - Free Report) , Alaska Air Group (ALK - Free Report) and American Airlines (AAL - Free Report) increased their fuel cost per gallon projections for the third quarter of 2023. United Airlines now expects the fuel cost per gallon in the $2.95-$3.05 band (the earlier guidance was in the $2.5-$2.8 range).
Southwest Airlines now expects the fuel cost per gallon in the $2.7-$2.8 band (the earlier guidance was in the $2.55-$2.65 range). Operating revenue per available seat mile for the third quarter of 2023 is now expected to decline in the 5-7% band from third-quarter 2022 actuals (the earlier projection was for a 3-7% decline).
Alaska Air now expects the fuel cost per gallon in the $3.15-$3.25 band (the earlier guidance was in the $2.7-$2.8 range). Due to high fuel costs, the third-quarter adjusted pre-tax margin is now expected in the 10-12% range (earlier guidance was 14-16%). Total revenues are now expected to increase in the 1-2% range from third-quarter 2022 actuals (the earlier projection was for a 0-3% increase).
American Airlines now anticipates third-quarter 2023 average fuel cost per gallon in the band of $2.90-$3.00 band (prior view: $2.55-$2.65 band). Apart from rising fuel expenses, AAL is also burdened with the retroactive pay expense of almost $230 million. Due to high fuel and labor expenses, the third-quarter adjusted operating margin is now anticipated in the range of 4%-5% (prior view: 8-10%). AALnow anticipates third-quarter 2023 earnings in the range of $0.20-$0.30 per share (prior view: $0.85-$0.95).