Delta Q2 2014 Conference Call Highlights
Delta Air Lines (NYSE: DAL)reported its Q2 2014 conference call Wednesday after the market open, releasing details of sales and some guidance.
Before the conference call, Delta released earnings with an EPS of $1.04 versus analyst estimates of $1.03, beating by $0.01. EPS were Up 6 percent from the same quarter last year. Revenue came in short of expectations, Delta reported $10.60 billion compared to consensus $10.64 billion.
Highlights From The Call:
- Delta announced 9 percent of top line growth for the quarter and 1.4 billion pre tax profit.
- Passenger revenue increased by $772 million (nine percent) for the quarter.
- $100 million in buy back in shares, Delta repurchased 12.4 million shares in the quarter.
- 4 points margins expansion, $1.5 billion free cash flow
- 11 percent improvement in baggage performance.
- Delta's management was proud to announce the airliner currently obtains the lowest capital cost per aircraft in the sector. Ex fuel gases was flat for the quarter.
- Delta JD reported 30 percent capacity rate.
- Non-fuel cost 3 percent annually, previous goal given. Non-fuel cost decreased by 2 percent for each of the last four quarters.
- Fuel expense declined by $168 million due to crude hedge benefits. Delta's average fuel price was $2.93 per gallon for the June quarter, including $99 million in settled hedge gains. Delta's operations at the refinery made a $13 million profit for the June quarter, $64 million increase year-over-year. Fuel expense decreased by 40 million in the quarter.
- Forecast operating margin between 15 to 17 percent in Q3.
- In a recent study, 85 percent of travel managers plan to continue to use delta for future flights.
- Total unit revenues increased by 7 percent, while domestic unit revenue grew 6 percent. More than 60 percent of business is domestic.
- Latin unit revenues were flat and demand weakness around the World Cup.
- In pacific network restructuring decreased due to weaker yen. Delta holds a yen hedge of $130 million.
- Delta plans to improve international capacity.
- Capacity situation in transatlantic to be a concern reporting 8 percent unit revenue.
- Increased intra Asia flights by 10 percent.
- Operating expense increased 3 percent due to profit sharing in the quarter.
- Maintenance savings reducing maintenance costs by $60 million.
- Delta investing in new technology with new systems for report agence.
- Current prices of crude hedged should add another $100 million in benefit.
- Guidance for the second half of 2014 to maintain capex in the 2 to 3 billion range.
- Joint venture in winter quarter (second half of Q4 to first half of Q1) was between 1 to 3 percent nearly half of its previous amount.
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