Categories Consumer, Retail

Delta Air Lines stock falls despite 2019 initial guidance

Delta Air Lines (DAL) stock fell over 4% just an hour of market close on Thursday as investors were unsatisfied with the company’s confidence in achieving its earnings and revenue target for the full year 2019. The airline provided its initial target for fiscal 2019 at its annual investor day held today in New York.

The company remained confident of achieving double-digit earnings growth of $6 to $7 per share in 2019 helped by the top-line growth of 4% to 6% and margin expansion with a 15% after-tax return on invested capital. The revenue growth will be benefited by its pipeline in commercial initiatives, brand momentum, rising diverse revenue stream, and premium product mix.

As the efficiency initiatives gain momentum and Delta’s fleet transformation continues, the non-fuel unit cost growth trajectory improving. Non-fuel unit cost growth is predicted to be about 1% for 2019. The company’s plan on increasing its bottom line remained the key highlight of the investor day as there remained a lag in the broader market for most of the year by the sector.

In the recent third quarter, the company’s top line growth of 8% was driven by higher premium product ticket revenues and double-digit percentage increases in cargo, loyalty and maintenance, repair and overhaul revenue. The bottom line improved 13% backed by revenue momentum, tax reform benefits and a lower share count.

Delta Air Lines’ stock gets a boost after Q3 earnings beat estimates

An increase in fuel prices drove adjusted operating expenses higher by $1 billion. Adjusted fuel expense increased 35% while cost per available seat mile excluding fuel remained flat. Despite this, the growth in passenger and revenue improvements across all of its components helped push earnings growth.

For the fourth quarter, the company expected total revenue growth of around 8% and total unit revenue excluding refinery sales growth of 3% to 5%. Earnings were anticipated to be $1.10 to $1.30 per share.

Higher fuel costs have been a major concern for airline companies but the recent slump in energy prices could aid in the companies to regain a strong bottom line. This year, all airlines have experienced a dent in the bottom line due to a jump in fuel costs. But Delta has escaped from the impact as 90% of the fuel expenses increase was covered by strong revenue.

Shares of Delta opened lower on Thursday and is trading in the red territory. The stock has fallen over 4% in the year so far and over 6% in the past three months.


Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text.

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

One thought on “Delta Air Lines stock falls despite 2019 initial guidance

Leave a Reply

Your email address will not be published. Required fields are marked *

Add Comment

Viewing Highlight