Sustained declines in the benchmark financial gauge at Delta and its major rivals decline helped push down airline stocks 15 percent this year through Wednesday.
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The airline, no. 2 by traffic in the USA, on Thursday reported a $1.5 billion profit for April, May and June, a 4 percent increase from the same period a year ago. Delta posted adjusted earnings of $1.47 per share on $10.447 billion in revenue, compared to the consensus estimates of $1.42 per share in earnings on $10.479 billion. In May, at its analyst meeting, the company disclosed its third consecutive 50% dividend hike, which will increase it to $0.81 per share annually from the start of the September quarter.
Revenue is down 2 percent to $10.45 billion, below the analysts’ forecast of $10.48 billion.
Shares traded up about 0.5% at $39.75 in Thursday’s premarket.
In the earnings release, Delta announced it is cutting 6 percentage points of capacity in the U.S.-U.K. market during the winter season to cope with the impact of Brexit.
Its revenue dropped 2% YoY to $260 million, out of which $65 million was due to foreign currency pressures.
Delta is slowing growth in available seats as a step toward halting a sustained slide in passenger revenue for each seat flown a mile, a measure known as unit revenue. The changes and other actions throughout its network will cut about 1 point off Delta Air Lines’ system capacity in the December quarter. The overall system capacity is seen to be up 1-2%. According to a research note published on Jun 19, 2015, analysts at Wolfe Research have upped their rating on the company stock from Peer Perform to Outperform.
However, the industry, which has experienced its fair share of turbulence with JETS still down 8.1% year-to-date, will still have a tough path ahead. On a year-over-year basis, PRASM fell 4.4% in the transatlantic market, 5.1% in the transpacific market, and 4.9% in Latin America.
Delta Air Lines Inc. said it would seek to boost a key passenger revenue yardstick by reining in an expansion set for later this year.
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Delta President Glen Hauenstein complained of “persistent headwinds” from domestic yields and geopolitical uncertainty but vowed to meet the goal of positive unit revenues.
