Earnings Review and Free Research Report: Delta's Revenue Grew 5.5%; Beat Estimates

LONDON, UK / ACCESSWIRE / October 23, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Delta Air Lines, Inc. (NYSE: DAL), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=DAL, following the Company's release of its third quarter fiscal 2017 operating results on October 11, 2017. The Atlanta, Georgia-based airline outperformed earnings expectations. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Earnings Reviewed

For the quarter ended September 30, 2017, Delta's operating revenue of $11.06 billion grew 5.5% compared to $10.48 million in Q3 2016, despite a $140 million reduction from Hurricane Irma. The Company's revenue numbers exceeded analysts' estimates of $11.04 billion.

For Q3 2017, Delta's adjusted pre-tax income totaled $1.72 billion, reflecting a $182 million decrease compared to pre-tax income of $1.91 billion in Q3 2016. The Company's pre-tax income for the reported quarter included a $120 million reduction from the operational disruption following Hurricane Irma that hit the Caribbean, Florida, Georgia and, specifically, Delta's hub in Atlanta.

Delta reported net income of $1.18 billion, or $1.64 per diluted share, for Q3 2017 compared to net income of $1.26 billion, or $1.69 per diluted share, in Q3 2016. The Company's adjusted per-share earnings came in at $1.57, ahead of Wall Street's expectations of $1.53.

Operating Results

During Q3 2017, Delta's Passenger revenue increased 4% to $9.40 billion, including $160 million from Delta's Branded Fares initiatives. The Company had reported total Passenger revenue of $9.07 billion in Q3 2016. Delta's Passenger unit revenues increased 1.9% on y-o-y basis, on 1.6% higher capacity.

For Q3 2017, Delta's Cargo revenue increased 11.5% to $187 million on y-o-y basis, driven by higher volumes in freight and mail. The Company's Other revenue for the reported quarter jumped 18.4% to $1.47 billion, primarily due to higher loyalty revenue and third-party refinery sales.

Cost Performance

During Q3 2017, Delta's adjusted fuel expense increased $230 million to $1.86 billion compared to adjusted fuel expenses of $1.63 billion in Q3 2016 as market fuel prices increased throughout the quarter. Delta's adjusted fuel price per gallon for the reported quarter was $1.68, which includes $0.03 of benefit from the refinery compared to $1.48 in the prior year's same quarter.

Delta's Cost per Available Seat Mile, (CASM-Ex), including profit sharing increased 4.8% to $10.05 on a y-o-y basis, including pressure from Hurricane Irma-related flight cancellations. The Company's normalized CASM-Ex, including profit sharing, increased 2.6% on y-o-y basis, driven by employee wage increases, product investments, and accelerated depreciation associated with Delta's narrowbody fleet initiatives.

Cash Flow, Shareholder Returns, and Adjusted Net Debt

Delta generated $1.6 billion of operating cash flow and $471 million of free cash flow during Q3 2017. The Company utilized this cash to invest nearly $1 billion into the business for aircraft purchases and improvements, facilities upgrades and technology, as well as $175 million to complete its 49% ownership of Aeromexico.

Delta's adjusted net debt at the end of Q3 2017 was $8.8 billion, up $2.7 billion versus year end as a result of Delta's March quarter 2017 unsecured debt issuance used to accelerate pension funding. At the same time, the Company's unfunded pension liability has declined by $3.8 billion at the same time from $10.6 billion at the end of 2016 to $6.8 billion at the end of the September quarter.

For Q3 2017, Delta returned $769 million to shareholders, comprised of $550 million of share repurchases and $219 million in dividends. The Company completed the 2015 $5 billion share repurchase authorization during the reported quarter. Delta noted that the upcoming quarter purchases will be made under its 2017 $5 billion share repurchase authorization.

Delta stated that its improved financial position was recognized with an investment grade credit rating by Standard & Poor's in Q3 2017 – the third agency to grant Delta this status.

Fuel Forecast

For FY17, Delta is forecasting non-fuel unit costs to be up approximately 4%, as harmonization of profit sharing plans, accelerated depreciation of narrowbody aircraft and pressure from weather-related cancellations have added over a point of pressure to costs from the Company's previous guidance. Delta stated that with the productivity from its fleet, maintenance, and technology initiatives combined with the determination of the Delta team, it is confident to deliver the Company's long-term 2% cost target for 2018 and beyond.

Stock Performance

At the closing bell, on Friday, October 20, 2017, Delta Air Lines' stock rose 1.91%, ending the trading session at $53.27. A total volume of 6.68 million shares have exchanged hands. The Company's stock price surged 3.38% in the last three months, 13.80% in the past six months, and 28.49% in the previous twelve months. Moreover, the stock gained 8.29% since the start of the year. The stock is trading at a PE ratio of 10.69 and has a dividend yield of 2.29%. The stock currently has a market cap of $38.14 billion.

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