Delta(US:DAL) Xin Lang Cai Jing·2025-11-20 12:32Core Viewpoint - Delta Air Lines reported strong Q3 earnings with record revenue and exceeded profit expectations, driven by high-end product sales, corporate travel, and customer loyalty programs [1][2]. Revenue Performance - Revenue increased by 6% year-over-year, reaching $16.7 billion; excluding oil sales to third parties, the growth was 4.1% [1]. - Domestic passenger revenue grew by 5% due to the recovery in business travel and stable demand for premium cabins [2]. Profitability Metrics - Operating profit rose by 21%, with a GAAP profit margin of 10.1% compared to 9.4% in the same period last year; adjusted profit margin was 11.2% [2]. - Net profit, including one-time gains, was $1.42 billion, with earnings per share (EPS) of $2.17; adjusted EPS grew 14% year-over-year to $1.71 [2]. Cost Management - Average fuel cost per gallon decreased from $2.53 to $2.25, a reduction of approximately 11% [2]. - Effective cost control measures contributed positively to the overall financial performance [2]. Future Guidance - Management's outlook for Q4 is optimistic, with EPS expected to be between $1.75 and $1.90, and operating profit margin projected at 11% to 12% [6]. - Free cash flow (FCF) forecast has been raised to $3.5 to $4 billion, aligning with market expectations for EPS [5]. Debt and Financial Health - Adjusted net debt decreased from $18 billion to $15.6 billion, with a total leverage ratio of approximately 2.4, within management's target range [6]. - 95% of the company's total debt is fixed-rate, providing stability in a high-interest-rate environment [6]. Shareholder Returns - Delta is increasing shareholder returns through stock buybacks and dividends, with a new $1 billion buyback program announced [7][8]. - The current dividend payout ratio is 11.03%, indicating potential for future growth in dividends [8]. Market Sentiment - Despite strong performance, there are concerns about the stability of earnings, with analysts suggesting that the stock price growth has been slow and valuation multiples are significantly discounted [10][11]. - Analysts believe the company can demonstrate stable performance in the coming quarters, prompting a reassessment of Delta's business value by the market [11].