Will Delta Air (DAL) Stock be Affected by Tentative Pilots Deal?

NEW YORK (TheStreet) -- Delta Air Lines (DAL) has reached a tentative contract agreement with its pilots union, members said yesterday in a letter, The Wall Street Journal reported. Details of the contract were not disclosed.

"This agreement represents the culmination of tremendous effort on your behalf," Delta MEC Chairman Mike Donatelli said in the letter, according to Reuters.

The new labor deal is six months ahead of schedule, the Journal noted.

The deal will be reviewed for seven days by The Delta Master Executive Council (MEC), which is a unit of the Air Line Pilots Association (ALPA), Reuters reported. If approved, the deal will be submitted to Delta's entire pilot base for a vote.

Shares of Delta Air Lines are decreasing by 0.03% to $42.90 in Friday's morning trading session.

While details are not yet known, it is expected that wages will increase after pilots at American Airlines Group approved a contract in January, with a 23% wage hike.

Separately, TheStreet Ratings team rates DELTA AIR LINES INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DELTA AIR LINES INC (DAL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DAL's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 5.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DELTA AIR LINES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DELTA AIR LINES INC reported lower earnings of $0.75 versus $12.29 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $0.75).
  • Net operating cash flow has significantly increased by 72.02% to $1,636.00 million when compared to the same quarter last year. Despite an increase in cash flow, DELTA AIR LINES INC's average is still marginally south of the industry average growth rate of 75.59%.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Airlines industry average, but is greater than that of the S&P 500. The net income increased by 250.2% when compared to the same quarter one year prior, rising from $213.00 million to $746.00 million.
  • The gross profit margin for DELTA AIR LINES INC is currently lower than what is desirable, coming in at 29.36%. Regardless of DAL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DAL's net profit margin of 7.94% compares favorably to the industry average.
  • You can view the full analysis from the report here: DAL Ratings Report

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