Delta Air Lines Beats; Stock in Short Term Uptrend

NYSE:DALNew York, January 25th ( – Atlanta, Georgia based Delta Air Lines (NYSE: DAL) significantly bested market analysts’ consensus expectations for its latest fourth quarter earnings results that were released earlier today. 


The firm showed impressive Q4 2011 earnings of $0.50 per share using GAAP or Generally Accepted Accounting Principles. This was considerably higher than the $0.37 EPS consensus the stock market had been expecting, based on a survey of twelve professional analysts performed by Zacks Investment Research.


According to the company’s earnings report, Delta Air Lines showed a net income of $379 million, excluding special items, or a GAAP net income of $425 million in the last quarter of 2011 that concluded on December 31st.  Those income numbers amount to earnings of $0.45 and $0.50 per share respectively, and they demonstrate a respectable increase from the earnings result seen in the fourth quarter of 2010. 


The stock market responded positively to Delta’s latest earnings news. After the announcement, Delta’s stock rose in active trading, and as of this writing, the stock was trading up $0.79 or +8.42% on the day to the $10.17 per share level in active trading of 18.4 million shares on the New York Stock Exchange.


Delta’s Revenues Show Overall Improvement


Delta Air Lines’ Q4 2011 revenue rose 8.3 percent to $7.223 billion, which demonstrated an improvement of $610 million compared with its previous result for 2010’s fourth quarter.  Nevertheless, the company showed a reduction in capacity of -3.5 percent overall, as its capacity in most regions declined. An exception was seen in its Latin American operations, where capacity increased by 5.0 percent over the same comparison period.


Broken down by region, Delta’s fourth quarter revenue was dominated by its domestic U.S. passenger business, which showed a year on year revenue gain of 9.9 percent to $3.217 billion.  The company’s Pacific and Latin American passenger revenue also showed respectable gains of 13.5 percent and 11.2 percent respectively to $819 billion and $404 billion. Atlantic passenger revenues came in at $1.223 billion.


CEO Upbeat as Delta Takes Favorable Steps to Share Profits, Reduce Debt Burden and Hedge Fuel


Delta CEO Richard Anderson sounded very positive about the Q4 earnings results, stating that, “Delta people pulled together in 2011 to produce a solid profit, strong cash generation, and the best operational performance in the industry for our customers.”


Furthermore, over the coming year, Anderson expects that the company “will continue our commitment to sustained profitability and superior returns by growing and diversifying our revenues, while taking a disciplined approach to capacity, costs and capital spending.”


The CEO also acknowledged the Delta staff for their hard work, which had earned them a total of $264 million in profit sharing bonuses and $60 million in Shared Rewards for their performance over the year.

Another positive development was the announcement that Delta had reduced its substantial debt burden by $4.1 billion since 2009, despite having to take a loss in 2011 to extinguish some of the debt early.  This left the company’s adjusted net debt at the $12.9 billion as of December 31st of 2011, which still remains at a high level relative to other firms in its industry.


On the expense side, the firm’s total operating expenses remained steady, excluding fuel costs. The company’s fuel hedging program was also successful in bringing down its average Q4 fuel price to $2.79 per gallon on a GAAP basis, which includes mark to market gains on open hedge positions.


The Technical Picture for Delta Air Lines is Bullish in the Near Term


From a technical perspective, Delta Air Lines’ (NYSE: DAL) share price has shown a mild and choppy upwards trend during the last six months, although the upside has accelerated considerably in January of this year to form a well-established near term up channel. 

This short term uptrend has thus far taken the stock to its recent high point of $10.30 that was reached earlier today. Resistance shows on the chart in the 11.45/11.60 region, and then above that at 12.03 and 12.34.  Support for the share price has been established at 9.29, 8.66 and 8.13.  

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