Delta Air Lines, Inc.(NYSE: DAL) in the fourth quarter 2016 ended 31st December has reported the adjusted earnings per share of 82 cents, which is as per the analysts’ estimates for the adjusted earnings per share of 82 cents. The company had reported the revenue of $9.46 billion in the fourth quarter 2016, beating the analysts’ estimates for revenue of $9.35 billion.
However, in 4Q 2016 the passenger unit revenues had declined 2.7 percent and there was 0.9 percent increase in capacity. DAL’s commercial strategies and capacity actions combined with the demand improvement has led the company to transition back into sustained positive unit revenues.
Delta Air Lines in the fourth quarter 2016 has reported the 36.5 percent decline in the net income to $622 million from $980 million. The total operating revenue fell to $9.46 billion from $9.50 billion. The adjusted pre-tax income for the 4Q 2016 was $923 million, which is a $524 million decrease from the corresponding quarter 2015, primarily due to the new pilot agreement. However, the fuel costs had declined during the fourth quarter, and the average fuel price per gallon has also fallen.
In the fourth quarter of 2016, DAL has returned $449 million to shareholders, comprised of $149 million of dividends and $300 million of share repurchases.
For the full year 2016, DAL has reported the adjusted earnings per share of $5.32 on revenue of $39.64 billion. DAL has overall returned $3.1 billion to the shareholders in 2016 through dividends and share repurchases.
For the March quarter (1Q 2017), Delta Air Lines anticipates a passenger unit revenue increase of flat to up 2 percent compared to 1Q 2016. Moreover, DAL remains conservative and expects 11-13 percent target for operating margin. The Fuel price, including taxes and refinery impact, s expected to be in the range of $1.68 – $1.73 for 1Q 2017. The system capacity in 1Q 2017 is expected to be down 0% – 1% compared to 1Q 2016.
DAL is expecting the margin pressure would peak in the March quarter, and the margins are expected to expand from beginning in the second half of the year.
DAL stock has risen 7.4% in the last one year (Source: Google Finance). According to tipranks.com, 5 analysts has covered the stock while recommend a “Strong Buy”. DAL has an average price target of $55, which is a further upside of 8%.