Earnings Preview: Delta Air Lines

Delta Air Lines (DAL) is expected to report Q2 earnings before market open on Wednesday, July 15, with a conference call scheduled for 10:00 am ET.

Guidance

Analysts are looking for EPS of 11c on revenue of $5.42M. The consensus range is (5c) to 30c for EPS, and $5.32M to $5.53M for revenue, according to First Call.

On June 6, Delta said it expects to record an additional $95M charge attributable to the workforce reduction programs and an $8M charge related to the discontinued use of certain airport facilities in Q2. Additional charges are expected to be incurred in future quarters in connection with other announced initiatives. Because these initiatives are not finalized, the company was not able to estimate the total amount or timing of these charges, including the amount that may result in future cash expenditures.

The company stated on June 18 that they expect a profitable June quarter, with an operating margin of 3% to 4%, and that the quarter will be in line with prior guidance.

Analyst Views

Investors will be interested to see how the continued fuel crisis will effect Delta's earnings report, as the entire airline sector was downgraded by both Merrill Lynch and Soleil Securities in May. Merrill Lynch downgraded Delta, AMR Corporation (AMR), Continental Airlines (CAL), US Airways Group (LCC) and UAL Corporation (UAUA) to Neutral from Buy citing earnings risk this year from higher energy costs, Soleil downgraded the entire sector to Neutral from Outperform, on liquidity concerns stemming from the rise in oil prices. The firm, however, maintained its Buy rating on Delta.