Market Overview

Cowen Analysts Attempt To Quantify The Effect Of Delta's Power Outage

Share:
Cowen Analysts Attempt To Quantify The Effect Of Delta's Power Outage

Delta Air Lines, Inc. (NYSE: DAL) suffered from an embarrassing system-wide outage last week that affected its entire operations.

Related Link: Delta Deals With System-Wide Outage; Investors Sell The News

Delta quickly fixed the issues which plagued its system, but it is still unclear the financial impact the event will have on its earnings. Cowen and Company's Helane Becker answered this pertinent question in a research report on Monday.

According to Becker, Delta's approximately 2,100 cancelled flights last week and many more cancelled flights could result in an approximate $120 million reduction in operating income. As such, the company is now tracking toward the lower end of its operating margin guidance of 19 to 21 percent.

Long-Term Impact

However, the impact isn't expected to be recognized in just the third quarter; rather, it will be seen over the next four quarters.

Becker added that Delta is likely to maintain its third quarter PRASM (passenger revenue per available seat mile) range of down 4 to 6 percent, but there is a potential revision to the low end of its initial expectation.

Becker stated that Delta has "historically taken great pride" in its operational performance, and now its management team will take a "more humble approach" to addressing its operational performance going forward.

Related Link: The Market's Delayed Reaction To Delta's Power Outage

The analyst also expects Delta to quantify the impact when it reports August's traffic metrics (likely out September 2) and may provide an updated third-quarter guidance at Cowen's own Annual Global Transportation Conference (September 7).

Shares remain Outperform rated with an unchanged $55 price target.

At time of writing, shares were up 1.4 percent on the day at $36.86.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for DAL

DateFirmActionFromTo
Nov 2019Initiates Coverage OnNeutral
Nov 2019MaintainsEqual-Weight
Oct 2019DowngradesOverweightEqual-Weight

View More Analyst Ratings for DAL
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas Reiteration Travel Top Stories Analyst Ratings Trading Ideas General Best of Benzinga

 

Related Articles (DAL)

View Comments and Join the Discussion!

10 Biggest Mid-Day Losers For Monday

Twilio Shares Continue To Run, Up 300% Since IPO