Delta Air Lines vs. Southwest Airlines : Outlook

Delta Air Lines Outlook

On April 21st, Delta narrowed its Q1 loss of $794 million, or $0.96/share, compared with $6.39 billion, or $16.15/share, in the same period last year. Delta was expected to post its Q1 loss due to reduced air traffic, yet substantive cuts to capacity have analysts projecting a profitable second quarter. Operating revenues climbed a sturdy 40% to $6.68 billion thanks to its Northwest merger.

Steady (yet slowly climbing) fuel prices over the past several months have helped the airline industry stabilize cost projections.

Back in March, Delta announced a 10% cut to international capacity, on top of a 6% to 8% drawdown in overall capacity for 2009. Delta also announced a $50 fee for all passengers who check a second bag.

Southwest Airlines Outlook

Southwest swung to an unexpected Q1 loss of $91 million, or $0.12/share, from a prior-year period profit of $34 million, or $0.05/share. Ex-items Southwest lost $20 million, or $0.03/share. Revenues from continuing operations slipped 6.8% to $2.4 billion amidst a noteworthy drop in business travel.

Hedged fuel costs that previously helped Southwest resist high energy prices might be biting into Southwest's profits as oil prices remain depressed below hedged positions. It would take a rise over roughly $55/bbl this year for Southwest's hedge position to work in their favor. Concerns also remain that Southwest has been slow to cut capacity at the pace in which demand is slacking.

Stock Battle Index

• Delta Air Lines vs. Southwest Airlines: Home
• Delta Air Lines vs. Southwest Airlines: Cities Serviced
• Delta Air Lines vs. Southwest Airlines: Stock Performance
• Delta Air Lines vs. Southwest Airlines: Outlook
• Delta Air Lines vs. Southwest Airlines: Who's Better