Delta Air Lines, Inc. (NYSE:DAL) has announced its second quarter 2015 financial results, posting adjusted earnings per share of $1.27, surpassing market expectations of $1.23. The airliner posted quarterly revenues of $10.71 billion, also beating market estimates of $10.63 billion, with growth of 0.8% year-over-year. It has been an excellent quarter in terms of net income, as the airliner announced growth of 85% year-over-year with net income of $1.48 billion for the quarter, along with diluted earnings per share of $1.83. On an annual basis, the market is expecting earnings per share of $4.43 on revenue of $40.98 billion. It is important to note that Delta Air Lines, Inc. (NYSE:DAL) posted a year-over-year drop in its first quarter 2015 revenue. According to Zacks, up to 92% of the analysts tracking the company hold a rating of ‘Buy’ for its stock. It’s also been an extremely popular stock among the smart money, with 116 of the funds tracked by Insider Monkey holding positions in the airliner as of March 31, far more than are invested in any other airline, and ranking it as the sixth-most popular stock overall.
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In a recent announcement from the airliner, it is planning to invest in the bankrupt Japanese airline, Skymark Airlines, to gain exposure to the international market. It will allow Delta Air Lines to compete with international players and according to its plan, the airline is aiming to acquire a 20% stake in the struggling airline. Some of the primary competitors of Delta Air Lines, Inc. (NYSE:DAL) in the international market include American Airlines Group Inc (NASDAQ:AAL) and United Continental Holdings Inc (NYSE:UAL). Both of these companies are offering their services under strategic alliances formed with Japanese airliners. Skymark Airlines’ largest creditor, Intrepid Aviation, was the one to suggest this alliance for the company, which filed for bankruptcy protection in January. Masaru Morimoto, Managing Director of Delta’s Japan business, said, “We have been looking for an opportunity to have an alliance partner in Japan.” However, there are no official remarks from the company about the partnership or percentage of stake it might acquire in the future.
While discussing the latest earnings results, Richard Anderson, Chief Executive Officer of Delta Air Lines, said, “Delta’s record results have allowed the company to invest in its employees through higher wage rates and profit sharing; improve the experience for our customers through new aircraft and innovative partnerships with global carriers; and uniquely deliver value for our shareholders by accelerating our capital returns while also paying down debt.”
Delta Air Lines, Inc. (NYSE:DAL) was among the five most popular investment choices of hedge funds in the transportation sector, and as mentioned, was the most popular airliner. According to our records, 116 hedge funds held positions in the airliner at the end of the first quarter with holdings of $7.15 billion collectively. That compares to 110 hedge funds with $7.53 billion in holdings three months earlier. Lansdowne Partners, led by Paul Ruddock and Steve Heinz, was the largest shareholder of the company in our database, with 24.76 million shares valued at $1.11 billion at the end of the first quarter. In addition to positive hedge fund sentiment, insiders at Delta Air Lines, Inc. (NYSE:DAL) are expecting growth in the company as well, with three of its directors indulging in share purchases including George Mattson, William H. Easter, and Francis Blake, who purchased 5,000 shares, 3,500 shares, and 5,000 shares respectively.
Despite the beats on both its top and bottom lines, shares of Delta are trading down by nearly 2.5% in pre-market trading this morning, which may be due to guidance of another decline in passenger unit revenue for the current fiscal quarter, of between 4.5% and 6.5% year-over-year. That metric fell by 4.6% in the second quarter. Nonetheless, Delta is anticipating earnings per share growth of around 30% year-over-year for the current quarter.
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