DETROIT ( TheStreet) -- The impact of Europe's economic decline will be closely watched as U.S. global transportation companies report earnings -- particularly on July 26, when Ford ( F), UPS ( UPS) and Delta ( DAL) all report. Each has a major presence in Europe. Ford is Europe's second-largest automaker. UPS is the leading U.S. overnight package company in Europe, while FedEx ( FDX) has a bigger presence in Asia. Delta has the largest trans-Atlantic system of the U.S. airlines. Among them, Ford appears to have the most exposure. The automaker has already said it will lose about $570 million in Europe in the second quarter. Meanwhile, GM ( GM)last week removed the head of GM Europe and temporarily replaced him with Vice Chairman Steve Girsky. GM is expected to have losses in Europe when it reports second-quarter results on Aug. 2. In a recent report, UBS analyst Colin Langan wrote that Ford's European losses are already priced in to the share price. Partially as a result, "Ford offers better risk/reward than GM," he said. Since Ford's June 28 announcement of its projected losses, its shares have declined 6%, while GM shares have been flat. Ford is outperforming GM in North America, where its production is up 4% to GM's 2%, with Ford's increase disproportionately including profitable full-size pickup trucks, Langan said. In Europe, he expects single-digit production declines for both companies. "Near-term upside could be limited given EU headwinds," he wrote. His full-year earnings estimates are $1.45 a share for Ford and $3.60 for GM, while analysts surveyed by Thomson Reuters estimate $1.31 for Ford and $3.21 for GM. Still, Langan has buys on both companies due to low valuations. Meanwhile, S&P Capital IQ analyst Efraim Levy has a buy on Ford, but on Tuesday he reduced his full-year estimate to $1.34 a share and his 12-month price target to $13 "to reflect deteriorating performance in certain international markets, particularly Europe." Ford lost market share in Europe in June, Levy wrote. As for GM, analysts estimate second-quarter earnings of 76 cents a share. Jefferies analyst Peter Nesvold estimates 75 cents, noting in a report that "GM has posted an annual loss in Europe for the past 12 years in a row, totaling $12.4 billion in losses, (while) Ford has earned a profit in the past seven out of eight years in Europe, for a cumulative $2.95 billion profit."
Nesvold estimated GM will lose about $432 million in Europe during the quarter and reduced his price target to $23, writing that "continuing losses in Europe combined with the uncertainty of a management change are likely to weigh on the stock for the foreseeable future." While the automakers appear to be the loss leaders in Europe, UPS and Delta are also expected to post results that reflect deteriorating European performance. Analysts estimate UPS will earn $1.17 a share, up from $1.05 a year earlier. But Goldman Sachs analyst Tom Kim rated UPS at neutral, although FedEx is a buy. "While this sector has a profitable track record through the cycle, it is leveraged to global trade which is slowing cyclically," Kim wrote. "There is downside risk to earnings multiples given macro uncertainty." As for Delta, Maxim Group analyst Ray Neidl has a buy on the shares, a $13 price target and a second-quarter earnings estimate of 71 cents a share; consensus is 68 cents. Neidl said Delta should benefit from lower fuel prices and an ability to adjust capacity as needed. In Europe, of course, U.S. carriers have all made double-digit capacity cuts over the past three years, and those cuts are continuing. Looking ahead, the outlook for Europe does not impress the region's airline CFOs and cargo division heads surveyed by the International Air Transport Association. "Improved expectations for the next 12 months suggest that airlines expect a stronger second half to this year and better profitability in the first half of 2013," IATA said, in a prepared statement. "There was significant regional variation with European airlines reporting the weakest confidence levels." >To follow the writer on Twitter, go to http://twitter.com/tedreednc. >To contact the writer of this article, click here: Ted Reed