Delta Air Lines Cuts Profit Outlook. Why It's Not All Bad News. | DAL Message Board Posts


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Msg  81 of 82  at  9/14/2023 3:08:59 PM  by

jerrykrause


Delta Air Lines Cuts Profit Outlook. Why It's Not All Bad News.

Delta Air Lines Cuts Profit Outlook. Why It's Not All Bad News.

. 
; New York
 

Delta Air Lines became the latest U.S. carrier to cut third-quarter guidance amid higher fuel prices Thursday. Shares are only slightly lower in Thursday trading.

There are reasons why. Firstly, American Airlines Group's (ticker: AAL) substantial outlook cut Wednesday had investors fearing the worst for the sector's biggest names. Delta (DAL) stock tumbled 2.8% in yesterday's session.

Secondly, Delta's revised guidance isn't all that bad—at least in comparison with expectations after American's update.

Delta now expects adjusted earnings per share to range from $1.85 to$2.05 in the third quarter, down from a previous range from $2.20 to $2.50. That's a 40-cents downgrade in midpoint guidance, compared with American's 65-cents downgrade—though its rival said 23 cents of that was due to a new pilot pay deal .

Delta's update also contained some positive news, which is somewhat unusual for the sector of late. The carrier sees third-quarter revenue in the "upper half" of its forecast for 11% to 14% growth year over year. Total revenue per available seat mile (TRASM) will be down 2% to 3%, an improvement on an earlier forecast for a 2% to 4% drop, it said.

In comparison, American expects a 5.5% to 6.5% fall in TRASM, from a previous range of a 4.5% to 6.5% decline. Spirit Airlines (SAVE) also cut its revenue guidance Wednesday, compounding the bad news for the sector.

Significantly, Delta stuck its full-year earnings guidance of $6 to $7 per share.

It's been a tough few months for airline stocks as investor enthusiasm over surging summer travel demand has been replaced by concerns over signs of a slowdown and higher fuel prices.

The U.S. Global Jets exchange-traded fund (JETS), which tracks the performance of airline stocks, has fallen 19% from its July peak. The ETF has fallen for nine of the past 10 trading sessions through Wednesday.

All in all, investors will have expected a guidance cut from Delta—given those of its peers and the sector's battle with higher fuel prices. The updated forecast, though lower, is actually a relief.

 


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82 Re: Delta Air Lines Cuts Profit Outlook. Not All Bad News. // ok! moveuplots 0 9/14/2023 7:41:30 PM




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