Boston, MA 10/10/2014 (wallstreetpr) – Delta Air Lines, Inc. (NYSE:DAL) would announce its financial results for the third quarter on October 16 before the market opens. The company will also hold a conference call on the same day at 10 in the morning. The company might have spent a little more on fuel than it originally estimated in the third quarter, which could play a key factor in its earnings performance.
Company’s Estimation
While releasing the second quarter results, the Delta Air Lines, Inc. (NYSE:DAL) estimated that it would likely spend $2.88 – $2.93 in the third quarter, including taxes, refinery impact and settled hedges. It expected to achieve operating margin of 15% – 17% and 2% – 3% in system capacity over the year-ago quarter period.
Delta Air Lines, Inc. (NYSE:DAL) said recently that it was projecting adjusted fuel price of $2.90 – $2.95 a gallon, which was slightly higher than its earlier estimation. While releasing September results, the company indicated that passenger unit revenue or PRASM recorded 2.0% growth in September. Similarly, it recorded 2% and 3% uptick in PRASM in August and July respectively.
The company has slashed its PRASM projection to 2% – 3% in early September for the third quarter from 2% – 4% predicted while announcing July results. The average growth rate in PRASM for the three-month period indicated that it would have achieved 2.33% growth in the third quarter. It was still below the mid-point of 2.5%.
Delta Air Lines, Inc. (NYSE:DAL)’ mainline completion factor was 99.7% in July, 99.6% in August and 99.8% in September. It meant that it would have achieved 99.7% completion factor in the third quarter.
Street Expectations
On average, Wall Street analysts’ expect the company to report earnings of $1.18 a share on revenue of $11.12 billion for the third quarter. Analysts’ consensus estimation suggests that earnings could witness year-over-year drop of 16.3% despite projecting revenue growth of 6%.
In the last two months, analysts’ have reduced their earnings expectations by five cents a share. It estimated $1.23 a share 60 days ago, which was reduced to $1.20 a share one month back. This was further slashed by two cents a share to $1.18 cents a share a week back.
Two factors could have weighed in reducing the earnings projection. The company’s increased projected fuel costs and below than it’s earlier predicted PRASM.
