Delta Airlines says its Q4 performance remained largely unthreatened by the 737 Max grounding

Delta Airlines says its Q4 performance remained largely unthreatened by the 737 Max grounding
  • Delta Airlines beats analysts' estimate for earnings and revenue in the fourth quarter.
  • CEO Ed Bastian says airline's performance remained unthreatened by the 737 Max grounding.
  • Delta Airlines upgraded its earnings guidance for 2020 but says that labor costs could increase.
  • Delta performed largely upbeat in the stock market in 2019.

A major U.S airline, Delta, announced its performance results for the fourth quarter on Tuesday. Beating the analysts’ expectations for earnings and revenue, the stock was seen trading higher later in the day.

Delta Airlines cited a sharp increase in demand especially for premium high-priced tickets and low fuel prices to have contributed to the upbeat results. Following the data, the U.S airline printed an over 3% gain in the stock market on Tuesday.

Delta Gained Around 25% In The Stock Market In 2019

Delta’s performance remained largely positive in 2019. The stock ended the year at around $60 that marked an around 25% annual gain in the stock market. The $39.74 billion company noted a record high of $63 last year in July.

Delta’s upbeat performance was also associated with its fleet not comprising the Boeing’s 737 MAX that is still waiting for regulatory clearance for public flights following its grounding in March due to the two fatal crashes that killed 346 people in total within 5 months. Delta’s competitors like United, Southwest, and American airlines relied heavily on Boeing’s fuel-efficient jetliner that resulted in a growth setback for such companies in 2019.

Ed Bastian, the current CEO of Delta Airlines commented on the Q4 earnings report and stated that since Delta has the older 737 jets in its fleet, its performance remained largely unthreatened by the 737 Max grounding. The CEO also expressed confidence in Boeing’s new CEO Dave Calhoun to bring the required amendments to get the former world’s largest plane manufacturer back on its feet.

Analysts Had Expected $1.40 Of Earnings Per Share For Delta In Q4

Based on Refinitiv’s data, analysts had expected $1.40 of earnings per share (EPS) for Delta Airlines in the fourth quarter. Tuesday’s report, however, printed a much higher $1.70 of earnings per share in Q4. The report further highlighted the company’s unadjusted net income at $1.1 billion that marked an 8% increase as compared to the same quarter last year.

On revenues front, Delta Airlines saw a sharp 6.5% growth ($11.44 billion) as compared to 2018’s fourth quarter. While the YoY growth for Delta’s main cabin remained capped at around 4% with a revenue of $5.24 billion in Q4, the premium cabins saw a massive 9% increase with revenue noted at $3.7 billion.

Following the Q4 results, Delta upgraded its 2020’s guidance and announced that it expects $6.75 to $7.75 of earnings per share in the year. Labor costs, on the other hand, according to Delta Airlines, are expected to increase in 2020.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.
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