Delta Air Lines, Inc. (DAL) Kicks Off Earnings Season on a Strong Note

Delta Air Lines, Inc. (ticker: DAL) has been the subject of some harsh criticism in the past week, but the stock was up nearly 2 percent Wednesday after the company reported better-than-expected first-quarter earnings.

Delta reported adjusted earnings per share of 77 cents, above consensus analyst expectations of 73 cents. The airline also reported revenue of $9.148 billion, slightly below consensus estimates of $9.156 billion.

Total passenger revenue declined 1 percent from the same quarter a year ago to $7.69 billion, but first-quarter traffic was up 0.5 percent to 47.95 billion revenue passenger miles. Capacity fell 0.5 percent to 57.87 billion available seat miles.

Looking ahead, Delta provided some upbeat guidance for the second quarter. The airline is expecting operating margins in the 17 to 19 percent range, a 1-to-3 percent increase in passenger unit revenues and a zero-to-1 percent increase in system capacity.

“March marked the first month of positive passenger unit revenues since November 2015, and we are encouraged by the current fare and demand trends across the network,” Delta president Glen Hauenstein said.

Delta expects positive unit revenue growth and expanding operating margins to persist throughout the remainder of 2017.

Following the earnings release, Cowen analyst Helane Becker said Delta’s margin commentary is “encouraging” and reiterated her firm’s “outperform” rating on Delta stock.

Delta shares had declined 12 percent in the three months leading up to its first-quarter earnings report. The company cut its first-quarter guidance earlier in April and has dealt with criticism over flight delays and cancellations in the past week. Delta canceled more than 3,000 flights and passengers dealt with delays for at least five days following a major storm in the Atlanta area on April 5. Since Atlanta is a major Delta hub, Delta’s flight schedule was disrupted more than the schedules of any of the other major airlines.

Airline investors are hoping Delta’s positive commentary will spill over to subsequent airline earnings reports. Each of the “big four” U.S. airlines stocks is…

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