Delta Air Lines (DAL - Free Report) kick-started the first-quarter 2019 earnings season in the airline space on a solid note, delivering better-than-expected earnings and revenues. The company’s bottom line (excluding 13 cents from non-recurring items) of 96 cents per share outpaced the Zacks Consensus Estimate of 90 cents and increased substantially on a year-over-year basis. Higher revenues aided the quarterly results.
Operating revenues totaled $10.47 billion, which surpassed the Zacks Consensus Estimate of $10.38 billion. Moreover, it compared favorably with the year-ago number.
Moreover, the airline behemoth issued an encouraging projection. For the second quarter, Delta expects earnings (excluding special items) between $2.05 and $2.35 per share. The mid-point of the guided range ($2.20 per share) is above the Zacks Consensus Estimate of $2.14.
For 2019, Delta expects revenues to grow 5-7%, up from its prior projection. The uptick can be attributed to strong demand for air travel. Investors were pleased with the company’s outperformance and upbeat projections. As a result, the stock gained value in pre-market trading.
On an adjusted basis, total revenue per available seat mile (TRASM) in the first quarter increased 2.4% year over year to 16.7 cents. TRAM improvement was more than the guidance of 2% increase projected earlier in April 2019.
Other Details
During the quarter under review, passenger revenues, which accounted for 88.4% of the top line, improved 6%. Meanwhile, cargo revenues declined 5%. However, other revenues increased 2%. The average fuel price (adjusted) in the first quarter was $2.05 per gallon, reflecting a 1.8% increase on a year-over-year basis.
Revenue passenger miles (a measure of air traffic) increased 4.8% to 51.6 billion. Capacity or available seat miles expanded 5% to 62.4 billion. Load factor (percentage of seats filled by passengers) declined 20 basis points to 82.7% as traffic growth lagged capacity expansion. Passenger revenue per available seat mile (PRASM) inched up 0.6% year over year to 14.83 cents. Passenger mile yield improved 0.8% to 17.93 cents.
Total operating expenses, including special items, climbed 4% year over year to $9,452 million. Operating cost per available seat mile decreased 1.4% to 15.14 cents. Also, non-fuel unit costs declined 0.2% to 11.06 cents.
Liquidity, Dividend and Share Repurchase
Delta exited the quarter with $1,910 million in cash and cash equivalents. The company generated free cash flow of $760 million and adjusted operating cash flow of $2 billion in the first quarter.
Long-term debt and finance leases stood at $7.7 billion at the end of the reported quarter compared with $8.3 billion at the end of 2018. The company has managed to reduce its net debt significantly from the 2009 levels.
Delta returned $$1.6 to its shareholders through dividends ($233 million) and share buybacks ($1.3 billion) in the quarter under review. The company expedited share buybacks in the quarter, funded by a $1 billion short-term loan.
Guidance
For second-quarter 2019, the carrier anticipates pre-tax margin in the range of 14-16%. The estimated fuel price, including taxes, settled hedges and refinery impact, is expected in the band of $2.10-$2.20 per gallon. Total unit revenue, on an adjusted basis, is anticipated to increase 1.5-3.5% in the quarter.
Total adjusted revenues are expected to grow between 6% and 8% in the April-June period. System capacity is anticipated to be up approximately 4-4.5% on a year-over-year basis. Cost per available seat mile, excluding fuel and profit sharing, is projected to rise 1-2% in the second quarter.
For 2019, free cash flow is anticipated between $3 billion and $4 billion. Cost per available seat mile, excluding fuel and profit sharing, is expected to grow 1% in the same period.
Upcoming Releases
Investors interested in the Zacks Airline industry are keenly awaiting first-quarter 2019 earnings reports from key players like United Continental Holdings (UAL - Free Report) , JetBlue Airways (JBLU - Free Report) and Southwest Airlines (LUV - Free Report) on Apr 16, 23 and 25, respectively.
Zacks Rank
Delta carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Delta Air Lines (DAL - Free Report) kick-started the first-quarter 2019 earnings season in the airline space on a solid note, delivering better-than-expected earnings and revenues. The company’s bottom line (excluding 13 cents from non-recurring items) of 96 cents per share outpaced the Zacks Consensus Estimate of 90 cents and increased substantially on a year-over-year basis. Higher revenues aided the quarterly results.
Operating revenues totaled $10.47 billion, which surpassed the Zacks Consensus Estimate of $10.38 billion. Moreover, it compared favorably with the year-ago number.
Moreover, the airline behemoth issued an encouraging projection. For the second quarter, Delta expects earnings (excluding special items) between $2.05 and $2.35 per share. The mid-point of the guided range ($2.20 per share) is above the Zacks Consensus Estimate of $2.14.
For 2019, Delta expects revenues to grow 5-7%, up from its prior projection. The uptick can be attributed to strong demand for air travel. Investors were pleased with the company’s outperformance and upbeat projections. As a result, the stock gained value in pre-market trading.
On an adjusted basis, total revenue per available seat mile (TRASM) in the first quarter increased 2.4% year over year to 16.7 cents. TRAM improvement was more than the guidance of 2% increase projected earlier in April 2019.
Other Details
During the quarter under review, passenger revenues, which accounted for 88.4% of the top line, improved 6%. Meanwhile, cargo revenues declined 5%. However, other revenues increased 2%. The average fuel price (adjusted) in the first quarter was $2.05 per gallon, reflecting a 1.8% increase on a year-over-year basis.
Revenue passenger miles (a measure of air traffic) increased 4.8% to 51.6 billion. Capacity or available seat miles expanded 5% to 62.4 billion. Load factor (percentage of seats filled by passengers) declined 20 basis points to 82.7% as traffic growth lagged capacity expansion. Passenger revenue per available seat mile (PRASM) inched up 0.6% year over year to 14.83 cents. Passenger mile yield improved 0.8% to 17.93 cents.
Total operating expenses, including special items, climbed 4% year over year to $9,452 million. Operating cost per available seat mile decreased 1.4% to 15.14 cents. Also, non-fuel unit costs declined 0.2% to 11.06 cents.
Liquidity, Dividend and Share Repurchase
Delta exited the quarter with $1,910 million in cash and cash equivalents. The company generated free cash flow of $760 million and adjusted operating cash flow of $2 billion in the first quarter.
Long-term debt and finance leases stood at $7.7 billion at the end of the reported quarter compared with $8.3 billion at the end of 2018. The company has managed to reduce its net debt significantly from the 2009 levels.
Delta returned $$1.6 to its shareholders through dividends ($233 million) and share buybacks ($1.3 billion) in the quarter under review. The company expedited share buybacks in the quarter, funded by a $1 billion short-term loan.
Guidance
For second-quarter 2019, the carrier anticipates pre-tax margin in the range of 14-16%. The estimated fuel price, including taxes, settled hedges and refinery impact, is expected in the band of $2.10-$2.20 per gallon. Total unit revenue, on an adjusted basis, is anticipated to increase 1.5-3.5% in the quarter.
Total adjusted revenues are expected to grow between 6% and 8% in the April-June period. System capacity is anticipated to be up approximately 4-4.5% on a year-over-year basis. Cost per available seat mile, excluding fuel and profit sharing, is projected to rise 1-2% in the second quarter.
For 2019, free cash flow is anticipated between $3 billion and $4 billion. Cost per available seat mile, excluding fuel and profit sharing, is expected to grow 1% in the same period.
Upcoming Releases
Investors interested in the Zacks Airline industry are keenly awaiting first-quarter 2019 earnings reports from key players like United Continental Holdings (UAL - Free Report) , JetBlue Airways (JBLU - Free Report) and Southwest Airlines (LUV - Free Report) on Apr 16, 23 and 25, respectively.
Zacks Rank
Delta carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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