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Delta Air Lines (DAL) Stock Dips on Dull Q2 Guidance
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Shares of the Atlanta, GA-based Delta Air Lines, Inc. (DAL - Free Report) dropped over 2% impacted by the bearish guidance provided by the company at the Deutsche Bank Annual Global Industrials & Materials Summit. However, the stock recovered slightly, to conclude the trading session on Jun 8 at $41.85, down 0.59%.
The airline behemoth’s chief financial officer, Paul Jacobson stated at the event that the company expects passenger revenue per available seat mile (PRASM: a measure of unit revenue) to decline around 4.5% in the second quarter of 2016. The earlier projection had called for a decline in the band of 2.5% to 4.5%.
We are not surprised with the bearish guidance as Delta had revealed a steeper PRASM decline for May compared to April. In the month of May, PRASM had declined 5% compared with the 4% fall in April. We believe that the wider decline in May coupled with the new projection being at the weaker end of the earlier view dealt a severe blow to Delta’s aim of returning to positive unit revenue growth by year-end.
Apart from passenger unit revenue, Delta expects operating margin near the lower end (i.e. near 21%) of its previous view in the band of 21% to 23% for the second quarter. The uptick in oil prices has been cited as one of the factors behind the weak guidance.
Atlanta–Brussels Flights to Resume
In a bid to expand its operations in Belgium, Delta announced that it intends to resume operating non-stop flights between Brussels and Atlanta, effective Mar 26 next year. The flights, suspended in the wake of the Brussels attacks in March, will operate on a daily basis throughout summer.
In a bid to improve the flying experience for passengers, Delta will be operating flights on The Boeing Company’s (BA - Free Report) 225-seat 767-300 jets that are equipped with modern facilities as well as Wi-Fi. Currently, Delta operates only daily flights throughout the year in the Brussels–New York JFK route.
Zacks Rank & Key Picks
Delta Air Lines currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space include SkyWest, Inc. (SKYW - Free Report) and Air France-KLM SA (AFLYY - Free Report) , both of which sport a Zacks Rank #1 (Strong Buy).
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Delta Air Lines (DAL) Stock Dips on Dull Q2 Guidance
Shares of the Atlanta, GA-based Delta Air Lines, Inc. (DAL - Free Report) dropped over 2% impacted by the bearish guidance provided by the company at the Deutsche Bank Annual Global Industrials & Materials Summit. However, the stock recovered slightly, to conclude the trading session on Jun 8 at $41.85, down 0.59%.
The airline behemoth’s chief financial officer, Paul Jacobson stated at the event that the company expects passenger revenue per available seat mile (PRASM: a measure of unit revenue) to decline around 4.5% in the second quarter of 2016. The earlier projection had called for a decline in the band of 2.5% to 4.5%.
We are not surprised with the bearish guidance as Delta had revealed a steeper PRASM decline for May compared to April. In the month of May, PRASM had declined 5% compared with the 4% fall in April. We believe that the wider decline in May coupled with the new projection being at the weaker end of the earlier view dealt a severe blow to Delta’s aim of returning to positive unit revenue growth by year-end.
Apart from passenger unit revenue, Delta expects operating margin near the lower end (i.e. near 21%) of its previous view in the band of 21% to 23% for the second quarter. The uptick in oil prices has been cited as one of the factors behind the weak guidance.
Atlanta–Brussels Flights to Resume
In a bid to expand its operations in Belgium, Delta announced that it intends to resume operating non-stop flights between Brussels and Atlanta, effective Mar 26 next year. The flights, suspended in the wake of the Brussels attacks in March, will operate on a daily basis throughout summer.
In a bid to improve the flying experience for passengers, Delta will be operating flights on The Boeing Company’s (BA - Free Report) 225-seat 767-300 jets that are equipped with modern facilities as well as Wi-Fi. Currently, Delta operates only daily flights throughout the year in the Brussels–New York JFK route.
Zacks Rank & Key Picks
Delta Air Lines currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space include SkyWest, Inc. (SKYW - Free Report) and Air France-KLM SA (AFLYY - Free Report) , both of which sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>