Delta Air Lines Inc. (NYSE: DAL) reported third-quarter 2015 results before markets opened Wednesday. The airline posted adjusted diluted quarterly earnings per share (EPS) of $1.74 on revenues of $11.11 billion. In the same period a year ago, Delta reported EPS of $1.20 on revenues of $11.18 billion. Third-quarter results also compare to the consensus estimates for EPS of $1.70 on revenues of $11.1 billion.
On a GAAP basis, the company reported quarterly EPS of $1.65, which includes a year-over-year reduction of $1.12 billion in fuel costs.
Adjusted to include mark-to-market impacts, fuel averaged $1.80 a gallon for the company’s mainline fleet, a drop of $1.10 a gallon year-over-year.
The less-good news for Delta is that operating revenues declined by 2.3% on its mainline flights and 2.3% on its regional carriers. The consolidated domestic decline totaled 3%. Passenger unit revenues suffered from a 4.9%, about half of which was due to foreign currency translation. Total revenues rose by just 0.6% year over year in the quarter.
The company’s CEO said:
Despite currency volatility and global economic uncertainty which drove a modest decline in revenues, we expanded operating margins by over five points to 21%, grew earnings per share by 45%, and generated $1.4 billion of free cash flow in the September quarter as demand remains solid and fuel prices have dropped materially. We expect that strong performance to continue in the December quarter with operating margins of 16 to 18% and over 40% earnings per share growth.
For the fourth quarter of 2015, Delta expects fuel prices in the range of $1.75 to $1.80 per gallon. Seat capacity is expected to be flat, compared with the fourth quarter of 2014. Passenger unit revenue is expected to come in 2.5% to 4.5% lower than in the same period last year. The consensus analysts’ estimates call for EPS of $1.16 on revenues of $9.49 billion. Delta did not provide revenue or EPS estimates.
Shares traded up about 2.2% at $48.80 in premarket trading Wednesday, in a 52-week range of $30.43 to $51.06. Prior to this release Thomson/Reuters had a consensus price target of $61.03 on the company’s shares.
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