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Transportation

Delta Cautious But Not Suicidal (DAL, NWA)

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By Douglas A. McIntyre Published
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Delta Air Lines (NYSE: DAL) is in an odd spot this morning.  The company beat earnings and claims a gain before extraordinary items, yet it still had a wide loss on a net income basis.  The carrier posted Q2 earnings of $0.35 EPS excluding non-recurring items, $0.25 better than the First Call’s $0.10 estimate; revenues were $5.5 Billion versus the $5.39 Billion consensus. 

Delta sees Q3 operating margin of -1.3% ex-items and sees Fiscal 2008 operating margin of 0% to -2%. Delta also expects to cover approximately $3 Billion of the estimated $4 Billion raw impact of higher fuel input costs in Fiscal 2008 and expects to end  2008 with a liquidity position of about $3.2 Billion.

The company claimed 49% of its fuel consumption was hedged at $3.13 per gallon and said it realized a $313 million gain from its hedges.  Here is its fuel hedge position:
Q3 2008        48%         $2.94
Q4 2008        46%         $3.42
FY 2009        21%         $3.48
FY 2010        5%          $3.05

Delta said it plans to close its merger with Northwest (NYSE: NWA) by the end of 2008.  Shares of Delta are up nearly 5% at $4.90 in pre-market trading since the company is not sounding off the death of itself.  This also has Northwest shares up about 2.2% pre-market at $5.51.

Jon C. Ogg
July 16, 2008

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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