(Photo Credit: Bernal Saborio)

Delta Air Lines (DAL): Industrials - Airlines | Reports April 12, Before Market Opens

Key Takeaways

• The Estimize consensus is looking for EPS of $0.74, 1 cent above Wall Street, with revenue expectations of $9.176 billion, $20M ahead of the Street
• Key metrics, including PRASM, continue to fall short thanks to choppy domestic pricing, weaker business travel trends and currency headwinds.
• The cancellation of over 3,000 flights in the last week paint an ugly first look at how Q2 may fare.
• What are you expecting for DAL? Get your estimate in here!

Delta Airlines (DAL) is soaring into its first quarter earnings this Wednesday with falling expectations. In the last 3 months, EPS estimates for the international carrier have dropped 20%, with revenues remaining flat. Currently the Estimize consensus is looking for EPS of $0.74, 1 cent above Wall Street, with revenue expectations of $9.2 roughly in line with the Street. Compared to the same period last year, this represents a projected 44% decrease on the bottom line. Historically Delta has beaten the Estimize consensus in 54% of reported quarters.

Delta was one of of the top performing U.S. airlines in 2015 and the first half of 2016 despite mixed earnings in the past 2 years. However, last quarter the airliner missed bottom-line expectations by 2 cents, recording a YoY decline in growth of 45%. Revenues however impressed, coming in around $100M higher than anticipated, but flat on a year-over-year (YoY) basis.

Revenue has been the airline’s biggest problem, continually coming in flat or negative YoY. Choppy domestic pricing on top of weaker business travel trends had a material impact on results in fiscal 2015. Moreover, key metrics including PRASM (passenger revenue per available seat mile) continue to fall short of expectations. Just last week Delta cut it’s Q1 unit-revenue forecast to -0.5%, blaming weakened ticket sales closer to departure.

The Q1 report also comes as the airline has had to cancel more than 3,000 flights over the last week due to servere weather in Atlanta (Delta’s biggest hub) and the Northeast. These impacts won’t be seen until the Q2 report.

A potential bright spot that could offset these cancellations might come as a result of another airline’s misstep. Earlier this week it was widely publicized that United Airlines (UAL) dragged a passenger off of an overbooked flight to make room for a UAL employee. The accompanying videos of the bloodied passenger have ignited a PR nightmare for the airline and have many angry flyers vowing boycott. This could be positive for other US international carriers such as Delta and American.