Delta: Stocks Soar Despite Lowered Guidance

On Wednesday, airline company Delta (NYSE: DAL) stocks rip over 5.8% after releasing earnings despite lowered guidance for the next quarter.

According to its press release, CFO Paul Jacobson announced that Delta is on track to produce a solid 18-19 percent operating profit margin (compared to a prior outlook of 19-20%) and nearly $1.5 billion of operating cash flow, despite headwinds from operational disruption, volatile fuel prices and continued unit revenue weakness.

Jacobson told investors that the outage and subsequent operational recovery are expected to reduce September quarter pretax income by $150 million. That figure includes the $100 million in negative revenue impact from the outage reported on Sept. 2, and $50 million in net costs of the outage. He reiterated to investors Delta’s focus on being the first network carrier to return to positive unit revenue growth – an important indicator that margins and cash flows are sustainable regardless of the direction of fuel prices.

The overall cost for the computer outage is a whopping $150 million.

On August 8th, the problem occurred when the company had a power outage at Atlanta early on the morning, causing computers needed to book in passengers and fly jets to be down for nearly five hours.

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