Abu Dhabi, UAEMonday 19 August 2019

Delta Air net income grows but further revenue fall flagged

Unit revenue, which compares sales to flight capacity, will range between flat to up 2 per cent in the first quarter, compared with 3.2 per cent growth in the fourth quarter

Second-biggest US carrier Delta Air Lines sees turbulence ahead. Reuters
Second-biggest US carrier Delta Air Lines sees turbulence ahead. Reuters

Delta Air Lines on Tuesday forecast a further fall in unit revenue growth in the first quarter of 2019, adding to growing concerns about airlines' ability to raise fares in an uncertain global economy.

The United States' second-largest airline reported quarterly revenue in line with analysts' estimates and profit that topped consensus by 3 cents per share.

Net income surged to $1.02 billion, or $1.49 per share, in the quarter ended December 31, from $299 million, or 42 cents per share, a year earlier. The year earlier quarter included a charge of $394m related to the tax reform.

But it forecast year-on-year unit revenue growth would be hurt in the current quarter by the timing of Easter, increasing foreign exchange headwinds, and the ongoing government shutdown.

It also said first-quarter earnings per share should be between 70 cents and 90 cents, below analysts' estimate of 94 cents, according to IBES data from Refinitiv.

Shares fell 1.5 per cent to $46.99 in trading before the bell.

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Both Delta and larger rival American Airlines lowered estimates earlier this month for fourth-quarter unit revenue, raising concerns that an economic deceleration was hurting business travel and sending their shares sharply lower.

Delta said on Tuesday its unit revenue, which compares sales to flight capacity, will be in a range between flat to up 2 per cent in the first quarter, compared with 3.2 per cent growth in the fourth quarter ended December 31.

On an adjusted basis, the airline earned $1.30 per share for the fourth quarter, above the $1.27 per share expected by analysts.

Total operating revenue rose 5 percent to $10.74bn, in line with the Wall Street estimate of $10.74bn.

Updated: January 15, 2019 05:16 PM

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