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Delta Air Lines, Inc. 2Q 2017 Earnings: Shares Fall After EPS Miss

Delta Air Lines 2Q 2017 earnings report was released before opening bell this morning. The company posted adjusted earnings of $1.64 per share on $10.8 billion in revenue, compared to the Wall Street consensus estimates of $1.66 per share and $10.8 billion.

Delta Air Lines 2Q 2017 earnings

Delta Air Lines 2Q 2017 earnings report

Delta reported GAAP earnings of $1.68 per share for the second quarter, compared to $2.03 per share in last year’s second quarter. Management reported that the June quarter brought a return to growth in unit revenue, ending two and a half years without growth.

Passenger revenue in the second quarter grew $261 million, of which $100 million came from the airline’s Branded Fares initiatives. Passenger unit revenues rose 2.5% year over year as capacity increased by 0.4%. Mainline revenues rose 5.1% year over year to $5 billion, while regional revenues rose 2.2% to $1.5 billion. Atlantic revenues fell 0.6% to $1.5 billion, while Pacific revenues tumbled 12.9% to $578 million. Latin America revenues rose 14.1% to $658 million.

Higher mail and freight volumes drove an 11% increase in cargo revenue year over year. An increase in SkyMiles revenue and third-party refinery sales drove a 5% increase in other revenue.

Delta Air Lines releases third quarter outlook

Delta management expects the momentum that begun during the June quarter to continue in the September quarter. They guided for a 2.5% to 4.5% increase in passenger unit revenue and a 2% increase in system capacity. Delta Air Lines expects its margins to expand during the September quarter compared to last year’s September quarter, driven by growth in units and moderating fuel prices and non-fuel cost pressures.

“While 2017 is a transition period for Delta, we are encouraged by the improvement in unit revenues, leading to increasing conviction in our ability to expand margins as we move through the back half of the year,” Delta Air Lines CEO Ed Bastian said in a statement.

Following the Delta Air Lines 2Q 2017 earnings release, the company’s stock ticked lower in premarket trades, falling by as much as 2.49% to $54.10 per share.