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Delta Air Lines, Inc. (DAL - Free Report) reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis. Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air travel demand.
Adjusted operating revenues (excluding third-party refinery sales) came in at $14,553 million, up 13% year over year.
Passenger revenues, accounting for 84.7% of total revenues, increased 14% year over year to $13,119 million. Domestic passenger revenues in the third quarter increased 6% year over year. Passenger revenues also improved on the international front.
Cargo revenues declined 36% year over year to $154 million. Other revenues decreased 2% to $2,215 million.
Delta Air Lines, Inc. Price, Consensus and EPS Surprise
The adjusted operating margin was 13.5%. The company reported an operating margin of 11.6% on an adjusted basis a year ago.
Below, we present all figures (in % terms) in comparison with the third-quarter 2022 results.
Revenue passenger miles (a measure of air traffic) increased 17% to 64,095 million. Capacity (measured in available seat miles) expanded 16% to 73,226 million. Load factor (percentage of seats filled by passengers) increased to 88% from 87%.
Passenger revenues per available seat mile decreased 1% to 17.92 cents. Passenger mile yield decreased to 20.47 cents from 20.93 cents. On an adjusted basis, total revenues per available seat mile inched down 2.5% to 19.87 cents in the June quarter.
Total operating expenses, including special items, escalated 8% to $13,504 million. Salaries and related costs surged 23% to $3,760 million in the reported quarter.
Fuel gallons consumed increased 14% to $1,062 million. Average fuel price per gallon (adjusted) decreased 21% to $2.78. Non-fuel unit cost (adjusted or CASM-Ex) increased 1.3% to 12.59 cents in the reported quarter.
DAL exited the third quarter with cash and cash equivalents of $2,835 million compared with $2,668 million at the end of the prior quarter. Delta Air Lines had an adjusted net debt of $20.15 billion.
DAL generated $1,076 million of cash from operating activities. Free cash flow came in at $250 million.
Outlook
Fourth-quarter earnings are expected in the range of $1.05-$1.30 per share. The Zacks Consensus Estimate for the same is currently pegged at $1.92 per share.
The adjusted operating margin in the December quarter is expected between 9-11%. Management projects fourth-quarter total revenues (adjusted) to increase in the 9-12% range on a year-over-year basis.
DAL now anticipates 2023 adjusted earnings in the range of $6.00-$6.25 per share (prior view: $6-$7). The Zacks Consensus Estimate for the same is currently pegged at $5.98 per share.
For 2023, the adjusted operating margin is expected to be around 11.5%. Management projects full-year total revenues (adjusted) to increase 20% on a year-over-year basis.
KEX has an expected earnings growth rate of 56.92% for third-quarter 2023. KEX delivered a trailing four-quarter earnings surprise of 8.03% on average.
The Zacks Consensus Estimate for KEX’s third-quarter 2023 revenues is pegged at $794.60 million, indicating growth of 6.54% year over year. Shares of KEX have gained 28.1% year to date.
Wabtec has an expected earnings growth rate of 19.67% for the current year. WAB delivered a trailing four-quarter earnings surprise of 3.42% on average. WAB has a long-term earnings growth rate of 13.66%.
The Zacks Consensus Estimate for WAB’s current-year earnings has improved 4.9% over the past 90 days. Shares of WAB have gained 6% year to date.
The Zacks Consensus Estimate for ODFL’s third-quarter 2023 earnings has been revised upward by 1.4% in the past 90 days. ODFL has a long-term earnings growth rate of 8.60%.
ODFL delivered a trailing four-quarter earnings surprise of 3.86% on average. Shares of ODFL have gained 50% year to date.
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Delta Air Lines (DAL) Q3 Earnings & Revenues Top, EPS View Cut
Delta Air Lines, Inc. (DAL - Free Report) reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis. Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air travel demand.
Adjusted operating revenues (excluding third-party refinery sales) came in at $14,553 million, up 13% year over year.
Passenger revenues, accounting for 84.7% of total revenues, increased 14% year over year to $13,119 million. Domestic passenger revenues in the third quarter increased 6% year over year. Passenger revenues also improved on the international front.
Cargo revenues declined 36% year over year to $154 million. Other revenues decreased 2% to $2,215 million.
Delta Air Lines, Inc. Price, Consensus and EPS Surprise
Delta Air Lines, Inc. price-consensus-eps-surprise-chart | Delta Air Lines, Inc. Quote
Other Aspects of the Q3 Earnings Report
The adjusted operating margin was 13.5%. The company reported an operating margin of 11.6% on an adjusted basis a year ago.
Below, we present all figures (in % terms) in comparison with the third-quarter 2022 results.
Revenue passenger miles (a measure of air traffic) increased 17% to 64,095 million. Capacity (measured in available seat miles) expanded 16% to 73,226 million. Load factor (percentage of seats filled by passengers) increased to 88% from 87%.
Passenger revenues per available seat mile decreased 1% to 17.92 cents. Passenger mile yield decreased to 20.47 cents from 20.93 cents. On an adjusted basis, total revenues per available seat mile inched down 2.5% to 19.87 cents in the June quarter.
Total operating expenses, including special items, escalated 8% to $13,504 million. Salaries and related costs surged 23% to $3,760 million in the reported quarter.
Fuel gallons consumed increased 14% to $1,062 million. Average fuel price per gallon (adjusted) decreased 21% to $2.78. Non-fuel unit cost (adjusted or CASM-Ex) increased 1.3% to 12.59 cents in the reported quarter.
DAL exited the third quarter with cash and cash equivalents of $2,835 million compared with $2,668 million at the end of the prior quarter. Delta Air Lines had an adjusted net debt of $20.15 billion.
DAL generated $1,076 million of cash from operating activities. Free cash flow came in at $250 million.
Outlook
Fourth-quarter earnings are expected in the range of $1.05-$1.30 per share. The Zacks Consensus Estimate for the same is currently pegged at $1.92 per share.
The adjusted operating margin in the December quarter is expected between 9-11%. Management projects fourth-quarter total revenues (adjusted) to increase in the 9-12% range on a year-over-year basis.
DAL now anticipates 2023 adjusted earnings in the range of $6.00-$6.25 per share (prior view: $6-$7). The Zacks Consensus Estimate for the same is currently pegged at $5.98 per share.
For 2023, the adjusted operating margin is expected to be around 11.5%. Management projects full-year total revenues (adjusted) to increase 20% on a year-over-year basis.
Zacks Rank and Stocks to Consider
Currently, DAL carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Zacks Transportation sector are Kirby Corporation (KEX - Free Report) , Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB - Free Report) and Old Dominion Freight Line, Inc. (ODFL - Free Report) . Each of these companies presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KEX has an expected earnings growth rate of 56.92% for third-quarter 2023. KEX delivered a trailing four-quarter earnings surprise of 8.03% on average.
The Zacks Consensus Estimate for KEX’s third-quarter 2023 revenues is pegged at $794.60 million, indicating growth of 6.54% year over year. Shares of KEX have gained 28.1% year to date.
Wabtec has an expected earnings growth rate of 19.67% for the current year. WAB delivered a trailing four-quarter earnings surprise of 3.42% on average. WAB has a long-term earnings growth rate of 13.66%.
The Zacks Consensus Estimate for WAB’s current-year earnings has improved 4.9% over the past 90 days. Shares of WAB have gained 6% year to date.
The Zacks Consensus Estimate for ODFL’s third-quarter 2023 earnings has been revised upward by 1.4% in the past 90 days. ODFL has a long-term earnings growth rate of 8.60%.
ODFL delivered a trailing four-quarter earnings surprise of 3.86% on average. Shares of ODFL have gained 50% year to date.