4Q Airline earnings: What to expect
With the U.S. Capitol dome in the distance, a Delta airplane takes off from Ronald Reagan National Airport in Washington, DC.
U.S. airlines are on track for their eighth consecutive year of profits in 2017. As they report those 2017 and fourth-quarter profits investors will be focused on whether they can make those profits grow.
Delta Air Lines kicks off earnings season on Thursday, reporting before the market opens. The second-largest U.S. carrier certainly had its share of disruptions in 2017 — a series of powerful storms, a nearly half-day blackout at its home airport in Atlanta. But the carrier is expected to post quarterly earnings per share of 0.88 cents, an increase of 7 percent on the year, according to analyst estimates compiled by Thomson Reuters.
The airline, like its competitors, is grappling with higher costs but strong passenger demand. Low fares and higher costs spook airline investors, but airlines need to strike a balance and not raise fares so high that it hurts demand. So far, full planes — as you know if you’ve looked around you on a flight lately — have not been a problem.
On the eve of airlines’ earnings season, investors appear to be pleased, because shares surged. United and American raised their forecasts for how much they expect to make out of each seat they fly a mile, a key industry metric. United shares rose more than 6.7 percent, their biggest one-day percentage gain since August 2016. American and Delta each rose more than 3 percent.
Whether it can continue depends on the outlook for 2018. Here are some key topics to look for as airlines report this month.