Categories Earnings, LATEST

Delta overcomes fuel woes; Q2 results beat street view

Benefitting from a record increase in revenues aided by broad-based traffic growth, aviation firm Delta Airlines (DAL) reported better-than-expected earnings for the second quarter. Meanwhile, unadjusted earnings took a beating from mounting fuel costs and the resultant squeeze on margins.

Adjusted earnings, excluding special items, increased to $1.77 per share in the second quarter from $1.59 per share a year earlier, surpassing expectations. Reported earnings were $1 billion or $1.47 per share, down from $1.19 billion or $1.62 per share registered in the year-ago quarter.

RELATED: Delta Air Lines flew a record number of passengers in June

Fuel purchase costs surged 40% to $2.36 billion and the average price per gallon rose to $2.19, dragging margins significantly. The impact of higher fuel prices was partially offset by the record revenues.

Revenues climbed 9.6% annually to $11.78 billion, with all regions except Latin America registering growth. Passenger revenues were higher by 8% compared to last year, while cargo revenues surged nearly 20%. Total adjusted revenues were $11.56 billion, up 8.6%.

“With strong revenue momentum, an improving cost trajectory, and a reduction of 50-100 bps of underperforming capacity from our fall schedule, we have positioned Delta to return to margin expansion by year end,” said Delta CEO Ed Bastian.

In the second quarter, the impact of higher fuel prices on profitability was partially offset by record-high revenues

During the June quarter, the company returned $813 million to shareholders and declared a 15% increase in its dividend.

For fiscal 2018, Delta expects earnings in the range of $5.35 per share to $5.70 per share, which includes a projected $2-billion rise in the fuel bill. The company is looking for a 3.5- 5.5% revenue growth in the third quarter, when operations are expected to benefit from its commercial initiatives.

Earlier this week, Delta had downgraded its outlook of adjusted earnings for the June-quarter to reflect the near-50% increase in fuel prices.

Among Delta’s competitors, United Continental (UAL) and American Airlines (AAL) are scheduled to release results for their second quarter on July 17 and July 27, respectively.

Shares of Delta lost more than 17% since January, when it reached an all-time high. The stock gained nearly 2% in premarket trading Thursday, after closing the last session lower.

RELATED: Fuel hike forces Delta Airlines to tweak earnings guidance

Most Popular

Earnings calendar for the week of March 8

On the heels of lawmakers moving closer to passing the stimulus bill, inflations concerns gripped the market after Federal Reserve chief Jerome Powell at a meeting said the reopening would

Why Costco’s (COST) growth prospects might depend on beating costs, digital lag

Though the retail boom triggered by the pandemic was estimated to be short-lived initially, the shopping spree continued as customers stocked up on essential items, concerned about the persistent market

Gap (GPS) hopes to see a favorable recovery by the second half of 2021

Shares of Gap Inc. (NYSE: GPS) were up 5.8% in afternoon hours on Friday. The stock has gained 103% over the past 12 months. Gap reported mixed results for the

Tags

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top