Delta expects operating margin of 18%-19% in 3Q2016, capacity growth of 1.5% y-o-y

Delta Air Lines stated (04-Oct-2016) it expects an operating margin of approximately 18%-19% in 3Q2016, which includes 1.5 points of impact from the Aug-2016 system outage. Consolidated passenger unit revenue (PRASM) for Sept-2016 declined 3.0% year-over-year, as close-in domestic yield pressures moderated slightly with the implementation of lower autumn capacity levels. Delta continued to face a supply-demand imbalance in the transAtlantic and headwinds from prior year Yen hedge gains in Sep-2016. Unit revenue is expected to decline up to 7% in 3Q2016, including up to 1 point of pressure from the technology outage. Non-fuel unit costs including profit sharing for 3Q2016 are expected to be flat versus the prior year, as Delta's cost discipline and productivity efforts "allowed it to overcome" a roughly 0.5 point CASM-ex headwind from the outage and produce a result consistent with initial guidance. Delta returned around USD650 million to shareholders through dividends and share repurchases in the quarter, bringing the total for 2016 to more than USD2.6 billion. Delta also expects a fuel price of USD1.47 to USD1.52, as well as cargo and other revenue of USD1.35 billion to USD1.45 billion. System capacity is projected to increase around 1.5% year-over-year in 3Q2016. Delta expects to record roughly USD250 million of other expenses in 3Q2016. [more - original PR]