Delta Airlines Earnings Recap: Consensus Beat By A Penny

On Tuesday morning, Delta Airlines (NYSE: DAL) reported its fourth quarter results.

The company announced an EPS of $0.65, beating the consensus estimate by a penny. Revenue of $9.07 billion came in $40 million higher than the consensus estimate. Delta benefited the most from higher fares and lower fuel costs.

During the quarter, the company returned $200 million to shareholders via $150 million in share repurchases and $51 million in dividend payments.

The company ended 2013 with $10.5 billion in net profits, produced close to $5 billion in operating cash flow, and $2.1 billion in free cash flow.

Management revealed to investors that it hopes to repeat 2013's strong performance throughout 2014.

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“Our December quarter profit caps off a successful year for Delta with strong profitability and margin expansion, industry-leading operations and significant improvements in customer satisfaction,” said Richard Anderson, Delta's chief executive officer. “We have a solid set of initiatives in place to improve our financial results, operational performance and customer satisfaction levels beyond 2013's record levels.”

The company has set a target for 10 percent to 12 percent annual operating margin and an annual target for pre-tax EPs growth of 10 percent to 15 percent.

To help achieve these growth objectives, the company will trim its capital expenditure spending to $2.3 billion from 2013's $2.5 billion. The company will retire more than 80 small regional jets in 2014 and sees its total regional fleet decline by 50 by the end of 2014.

Delta is projecting a “strong” margin expansion in the second and third quarter led by a “fairly robust” business travel throughout the year.

Deutsche Bank: Strong trends to continue

Michael Linenberg, research analyst at Deutsche Bank said that the company's results were positive.

“Delta reported December quarter 2013 diluted EPS of $0.65 which compared favorably to our forecast of $0.60 and the consensus of $0.63 (which had steadily risen from the mid-$0.50 range during the quarter),” Linenberg wrote in a research report following the company's “record” results.

Linenberg is projecting the company to earn $0.20 in the March quarter, which is near the consensus EPS forecast of $0.24.

Linenberg maintained a Buy rating on shares with a $37.00 price target.