"at risk" debunk #2
Here's my latest find. It took some digging and a little review of last years quarterly updates. This requires a compare and contrast of the two Q1 reports but is summarized best by Ed Bastian.
Here's the two reports.
2014 Q1
http://ir.delta.com/files/doc_financ...001_j55rj9.pdf
2015 Q1
http://ir.delta.com/files/doc_financ...001_k0ii9v.pdf
Both reports contain a discussion of Q2 revenue under the heading Revenue Environment.
The 2014 statement by Ed Bastian
“March quarter's top line growth of 5 percent shows the strength of Delta's revenue momentum even through the revenue loss from weather and a shift of the Easter holiday traffic into April,” said Ed Bastian, Delta’s president. "We see continued revenue strength as we move through the year from corporate revenue gains, the benefits of the Virgin Atlantic joint venture and improved ancillary revenues. These initiatives, coupled with a solid demand environment, should lead to unit revenue growth in the mid-single digits for the June quarter."
The 2015 statement by Ed Bastian
“For the March quarter, Delta delivered solid 5 percent top line growth and a 17.8 percent operating margin at market fuel prices,” said Ed Bastian, Delta’s president. “The substantial benefit from lower fuel prices will again more than offset the unit revenue decline of 2 to 4 percent for the June quarter to produce operating margins north of 20 percent at market fuel prices.”
2014 = mid single digit growth in revenue
2015 = 2-4% revenue decline
2014 = margin was 14.9%
2015 = margins north of 20% for June quarter
How can that be? Reduced revenue but increased margin? The only answer is costs. Fuel to be specific. We will hit it out of the park at market price fuel. Remember hedges were written down early so we have a market price fuel expense. That gives us a favorable peer to peer comparison on an even playing field. That will surely help the stock price. Focus on the margins though, that is what helps our profit sharing. We care about earnings not stock price or EPS.
June quarter profit sharing contributions will out pace last year.
The only risk to us collecting this is if we give it away.
We now have 2 quarters trending above 2014 with our historically best quarter of the year next Q3.