Airline stock to watch: Delta Air Lines, Inc. (NYSE: DAL)

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Delta Air Lines, Inc. (NYSE: DAL) stock rose over 0.1% in the pre-market session of January 15th, 2020 (Source: Google finance) after the company’s net income rose 8% to $1.1 billion in the quarter through Dec. 31 from a year earlier. The company posted better than expected results for the fourth quarter of FY 19 on the back of lower fuel prices and buoyant demand from holiday travelers. Although Delta and other airlines are facing challenges that includes new labor deals that could push up costs and a potential tempering in travel demand. The International Air Transport Association has said that global travel demand has continued to rise in recent months but that the rate of growth has slowed.

DAL in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.70, beating the analysts’ estimates for the adjusted earnings per share of $1.40, according to IBES data from Refinitiv. The company had reported the adjusted revenue growth of 6.5 percent to $11.4 billion in the fourth quarter of FY 19, beating the analysts’ estimates for revenue by 0.85%. This has positioned Delta as the largest carrier by revenue in the world. The company posted the total unit revenue growth of 2.4%. Passenger unit revenue rose up 1.4% over prior year, due to strength in domestic and Latin. Holiday travel came in ahead of expectations, on the back of strong consumer sentiment and a condensed booking period between Thanksgiving and Christmas. Premium product revenue grew 9% in the December quarter on top of last year’s 10% growth. Domestically, revenue was up 7.7% due to a 1.6% improvement in unit revenues. Corporate demand was strong at up 6% and premium products remain a key contributor, which is up 11% year-over-year.

Moreover, Internationally, the company posted revenue growth of 2% on flat PRASM. Latin was the best performing entity with 6.3% PRASM improvement, a 3-point improvement sequentially. Brazil and Mexico, both delivered double-digit PRASM gains. In the Atlantic, PRASM declined 1.6%, almost entirely due to FX. Pacific revenue stabilized on a 3-point sequential PRASM improvement. While China was soft, trends improved in Japan and Delta Premium Select performed well.

For fiscal 2020, the company expects revenue to grow in the range of 4% to 6%. The earnings per share is expected to be in the range of $6.75 to $7.75. Free cash flow is also expected to remain strong at $4 billion in 2020.

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