Delta beats profit estimates on new customers as rivals battle 737 MAX crisis


By Tracy Rucinski

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "CHICAGO (Reuters) – Delta Air Lines Inc on Tuesday reported a fourth-quarter profit that beat estimates, boosted by customers gained from rival airlines' 737 MAX cancellations and what Chief Executive Ed Bastian said was a growing preference for the Delta brand. "data-reactid =" 23 "> CHICAGO ( Reuters) – Delta Air Lines Inc Fourth-quarter earnings on Tuesday outpaced estimates, spurred by customers pulled from 737 MAX cancellations from rival airlines and what CEO Ed Bastian said was a growing preference for the Delta brand.

Delta shares rose approximately 4% in pre-market trading.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Airlines that own Boeing Co's 737 MAX are canceling more than 10,000 monthly flights in total as the aircraft remains grounded following two deadly crashes. "Data-reactid =" 25 "> Airlines owning Boeing Co & # 39; s The 737 MAX cancels more than 10,000 monthly flights in total, the aircraft remaining immobilized after two fatal accidents.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Delta does not operate the MAX, enabling it to grow its flight capacity and capture new customers while peers like Southwest Airlines Co have had to scale back. "data-reactid =" 26 "> Delta does not operate the MAX, which allows it to increase its flight capacity and capture new customers while its peers like Southwest Airlines Co had to reduce.

Delta, Atlanta-based net income increased 8% to $ 1.1 billion in the quarter as of December 31 from a year earlier. Adjusted earnings per share reached $ 1.70, exceeding analysts' expectations of $ 1.40 per share, according to IBES data from Refinitiv.

Total operating revenues increased 7% to $ 11.4 billion.

"There is no doubt that we are recruiting new customers, but that is not the main driver of our performance," Bastian told Reuters, citing strong customer loyalty at a time when demand for transport aerial continues to increase.

Delta's 90,000 employees will share a $ 1.6 billion profit-sharing payment on February 14, he said.

In the first quarter, Delta expects revenue growth of 5% to 7% year-on-year, as US demand continues to increase despite growing geopolitical tensions. Revenues per available seat mile are considered stable at 2% higher and unit costs excluding fuel up from 2% to 3%.

Delta generated $ 4.2 million in free cash flow for the year, a number it plans to repeat this year, allowing it to invest more in new technologies to improve passenger experience.

As for the new planes, Delta is still interested in the new medium-sized plane proposed by Boeing, known as the NMA, despite the late decision of the planner to launch the new plane or not, because it continues to face the fallout from the 737 MAX.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Delta wants to remain a customer of both Boeing and Airbus SE but the longer Boeing takes to decide on the NMA's launch, the fewer options the carrier has, Bastian said, noting Airbus' A321XLR and A330 could be alternatives to the new NMA. "data-reactid =" 34 "> Delta wants to remain a customer of Boeing and Airbus SE but the more time Boeing takes to decide whether to launch the NMA, the less options the carrier has, said Bastian, noting that Airbus' A321XLR and A330 could be alternatives to the new NMA.

The airline is also still interested in investing around 100 million euros ($ 111.34 million) in the rescue of Italian flagship carrier Alitalia as the Italian government works on a new consortium, Bastian said.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Separately, Delta is working with regulators in South America on anti-trust immunity after closing this month the acquisition of a 20% stake in LATAM Airlines Group , he said. "data-reactid =" 36 "> Separately, Delta is working with regulators in South America on antitrust immunity after finalizing the acquisition this month. a 20% stake in the LATAM Airlines group , he said.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Following the LATAM stake purchase, Delta unwound its partnership with Brazil's GOL , a move it said boosted fourth-quarter adjusted EPS by 9 cents. "data-reactid =" 37 "> Following the purchase of LATAM's stake, Delta has untied its partnership with the Brazilian GOL , a move he said boosted fourth quarter adjusted EPS by 9 cents.

A problem for 2020 will be the negotiation of ongoing contracts with the pilots.

(Report by Tracy Rucinski; Edition by Muralikumar Anantharaman and Bernadette Baum)

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