General Lee
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- Aug 24, 2002
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10:53 DAL Delta Air Lines: Conf call summary (14.97 +0.12) -Update-
Expect high oil prices will continue to be an industry-wide challenge. Says international expansion has been successful; key to the continued international expansion is JFK. Says strategic review is ongoing; will not comment on any specifics. For 2008 they are targeting flat earnings to their 2007 pre-tax earnings of $625 mln, despite needing to cover roughly $1.3 bln in expected higher fuel prices. Co is focusing on top line growth and expect to grow operating rev by 8%. They expect the business to generate more than $1.6 bln in cash from operations, sufficient to cover debt maturities and non-aircraft cap ex, and also increase unrestricted liquidity. For the full yr, they expect an operating margin in the range of 4-6%. Says main line non-fuel costs to be flat YoY, and fuel costs per gallon to be approximately $2.67, including the impact of fuel hedging. For 1Q08, they expect operating margin to be in the range of negative 2-4%. As of Jan 22, co hedged 26% of anticipated consumption for Q1. Utilizing heating oil, whole options with an equivalent jet fuel cap of $2.77 per gallon. For Q2, co hedged 31%, with an average jet fuel equivalent cap of $2.72. And they have also hedged 15% and 10% of anticipated consumption in Q3 and Q4 respectively. They expect net cap ex to be approximately $500 mln; expect net cap ex of $1.5 bln for the FY08... On Q&A, co says if the economy continues to weaken they do have a lot of airplanes with very low ownership costs so they can change the utilization of the fleet, which they aren't saying they would necessarily ground airplanes, but certainly they would fly less on Tuesdays, Wednesdays, and Saturdays, which are historically the laggards in industry RASM days. Says they have slowed down a little bit of the Com Air decision-making process, pending where the ultimate answers come out on the consolidation front but long-term, they believe Com Air will be an 'important part of the Delta family, however that contract gets structured'.
Bye Bye--General Lee
Expect high oil prices will continue to be an industry-wide challenge. Says international expansion has been successful; key to the continued international expansion is JFK. Says strategic review is ongoing; will not comment on any specifics. For 2008 they are targeting flat earnings to their 2007 pre-tax earnings of $625 mln, despite needing to cover roughly $1.3 bln in expected higher fuel prices. Co is focusing on top line growth and expect to grow operating rev by 8%. They expect the business to generate more than $1.6 bln in cash from operations, sufficient to cover debt maturities and non-aircraft cap ex, and also increase unrestricted liquidity. For the full yr, they expect an operating margin in the range of 4-6%. Says main line non-fuel costs to be flat YoY, and fuel costs per gallon to be approximately $2.67, including the impact of fuel hedging. For 1Q08, they expect operating margin to be in the range of negative 2-4%. As of Jan 22, co hedged 26% of anticipated consumption for Q1. Utilizing heating oil, whole options with an equivalent jet fuel cap of $2.77 per gallon. For Q2, co hedged 31%, with an average jet fuel equivalent cap of $2.72. And they have also hedged 15% and 10% of anticipated consumption in Q3 and Q4 respectively. They expect net cap ex to be approximately $500 mln; expect net cap ex of $1.5 bln for the FY08... On Q&A, co says if the economy continues to weaken they do have a lot of airplanes with very low ownership costs so they can change the utilization of the fleet, which they aren't saying they would necessarily ground airplanes, but certainly they would fly less on Tuesdays, Wednesdays, and Saturdays, which are historically the laggards in industry RASM days. Says they have slowed down a little bit of the Com Air decision-making process, pending where the ultimate answers come out on the consolidation front but long-term, they believe Com Air will be an 'important part of the Delta family, however that contract gets structured'.
Bye Bye--General Lee
