Strong Q2 by Delta Air Lines as Profits Rise by 39%

Delta Air Lines, Inc. (NYSE:DAL) released its second quarter results on Thursday which came in above expectations. Sales of $12.5 billion were up 6% year over year while per-share earnings of $2.21 were well also well above the prior year’s EPS of $1.49.

With a strong increase in revenues and not a whole lot to drag it down, it paved the way for Delta to post a big improvement in its operating margin. From just 14% a year ago, the company was able to see 17% of its revenues make it down past operating expenses.

The biggest increase in cost for Delta this past quarter came from depreciation expenses, which were up $130 million. The company saw cost reductions of $50 million relating to fuel and $178 million from ancillary businesses and refinery expenses.

Unlike its rival, American Airlines (NASDAQ:AAL) which suffered a setback from the 737 Max grounding that cost it $185 million, Delta saw none of that on its financials as the company does not fly the planes. And concerns surrounding the 737 may have resulted in more customers flying with Delta as well.

Although the results were impressive, the stock was up only around 2% during the day, which is fairly modest considering that the company also increased its guidance for the fiscal year.

Over the past 12 months, Delta’s stock price has risen by more than 20% and it’s right around its 52-week high. However, if it can keep producing results like these, there’s no reason the modestly priced stock couldn’t go higher.