Delta Air Lines

Oil prices can play spoilsport to airline stocks rally

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2017 was a fantastic year for airline stocks as relatively lower oil prices, higher demand and improved operational performance brightened the outlook for the sector. However, after a solid performance last year, the global airline industry is bracing for an oil shock in 2018. The recent run-up in oil prices, if sustained, may exert a significant drag on airlines profitability in this year.

Stock returns
[Image 1: Watchlist highlights stock returns for leading airlines as on Jan. 24, 2018
(*For US-based companies, returns as on Jan. 23, 2018)]

In 2017, jet fuel prices averaged at USD 1.5 per gallon for the first 3-quarters. A spike in crude oil moved jet fuel average price to USD 1.74 per gallon in Q4’17 from USD 1.59 per gallon in Q3’17. The impact of 9.4% sequential rise in jet fuel prices in Q4 was clearly visible in recently announced quarterly numbers of leading airlines.

For instance, Delta Air Lines witnessed an 8% y-o-y drop in net income in Q4’17 owning to 21% rise in fuel cost. At the same time, CASM (cost per available seat mile) – Fuel for Delta rose significantly by 38.67% sequentially to USD 0.03 in Q4’17.

Delta - CASM Fuel
[Image 2: Compare screen highlights trend for Delta Air Lines’ CASM – Fuel and Jet Fuel] Read the rest of this entry »

Delta Q3 passenger traffic rises 3%, load factor improves 150 bps despite Hurricane Irma

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Delta Air Lines rallied on Tuesday after the company issued better-than-expected guidance for the third quarter passenger unit revenue. Despite fall in passenger traffic in September 2017, Delta management expects passenger unit revenue to increase by 2% for the quarter ended September 2017.

In September, operations of few US-based airlines including Delta were affected by the Hurricane Irma. Bad weather conditions forced Delta to cancel 22,000 flights in the last month. As a result, the carrier reported a drop of 2.3% (on a year-on-year basis) in the number of passengers carried during September.

Passenger Traffic_Monthly

Heckyl’s alternative data platform FiND did not show any major impact of Hurricane Irma on Delta’s operational performance for the quarter ended September 2017. Our analysis showed a growth of 3% (on a y-o-y basis) in the number of passengers carried by Delta during the quarter ended September 2017.

Passenger Traffic_Qtr Read the rest of this entry »