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Airline stocks fall ahead of earnings rush as cancellations, 5G and higher rates weigh on sentiment

Boeing 737 MAX 8 Planes Face Renewed Scrutiny After Second Crash In 5 Months

Joe Raedle/Getty Images News

  • A confluence of concerns around the U.S. airline industry has the sector heading towards second down day in a row.
  • While airline CEOs are vocally calling for the 5G cellular rollout to be delayed once

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Comments (27)

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bet727 profile picture
Rising jet fuel costs are not good for the airlines.
metalhead profile picture
@bet727 yup, this is going to drag on earnings all year. I did some research last year on fuel hedging, and was surprised to find that of the major US airlines, only LUV was doing any. Delta does own a refinery and that may help them out a bit. But the others are unhedged and completely exposed to $100/bbl crude. They'll have no way to deal with it other than raise fares, which I expect them to do, but remember that there is lots of competition particularly from the ultra low cost carriers (Spirit, Frontier, etc.)
Tim Dunn profile picture
Delta's refinery is saving it more than 5 cents/gallon net on jet fuel. Based on what Delta has already posted for the 4th quarter and what AAL guided for, the savings is almost 12%.... the refinery strategy is saving Delta money, far more net-net than LUV is saving via hedges considering they lost hundreds of millions on bad hedges in the end of the last decade.
Delta's refinery led them to $5+ b billion in losses on oil purchase agreements. Being unhedged, without incurring the costs of a hedging organization has worked well. Even Southwest, that made a bunch hedging eventually had deals go south on them.

So earnings fluctuate a bit more, these are airlines!
metalhead profile picture
Delta essentially bamboozled investors by highlighting non-GAAP numbers in their Q4 earnings. They get what they deserve for not carefully parsing the report and realizing that on a GAAP basis, Delta lost money in Q4 and will again in Q1, per guidance.

Just presuming that Q2 and beyond will be "puppies and kittens" might not be very wise, either.
Tim Dunn profile picture
Delta reported GAAP and adjusted finances so it is completely false to say that they bamboozled anyone. If you can't read an earnings release, you probably shouldn't be investing in individual stocks.
metalhead profile picture
@Tim Dunn well, their own press release completely omitted the GAAP results. So, while I agree that real investors ought to be reading the actual earnings and skip the PR tout, it was still a borderline slimy move in my book.
Tim Dunn profile picture
you are dead wrong. It is THE VERY FIRST SENTENCE.


Jan 13, 2022
December quarter 2021 GAAP pre-tax loss of $395 million, pre-tax margin of (4.2) percent and loss per share of $0.64 on total operating revenue of $9.5 billion
December quarter 2021 adjusted pre-tax income of $170 million, adjusted pre-tax margin of 2.0 percent and adjusted earnings per diluted share of $0.22 on adjusted operating revenue of $8.4 billion
Full year 2021 GAAP pre-tax income of $398 million, on total operating revenue of $29.9 billion
Full year 2021 adjusted pre-tax loss of $3.4 billion on adjusted operating revenue of $26.7 billion
ATLANTA, Jan. 13, 2022 /PRNewswire/ -- Delta Air Lines (NYSE:DAL) today reported financial results for the December quarter and full year 2021 and provided its outlook for the March quarter 2022. Highlights of the December quarter and full year 2021 results, including both GAAP and adjusted metrics, are on page five and are incorporated here.
Tim Dunn profile picture
looks like T and VZ have agreed not to turn on C band 5G near some US airports on Wed.
there is no company that is willing to be responsible for the delay or cancellation of flights, or let alone a safety incident involving an aircraft.

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