Delta Pulls Off an Earnings Beat Despite the Quarter's Heavy Weather

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In this segment of the Motley Fool Money podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser, Supernova and Rule Breakers' David Kretzmann, and Motley Fool Hidden Gems' Andy Cross discuss Delta Air Lines' (NYSE: DAL) third quarter, which was solid despite weather issues and rising fuel costs.

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A full transcript follows the video.

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This video was recorded on Oct. 13, 2017.

Chris Hill: Delta Air Lines on the rise after third quarter profits came in higher than expected, which is pretty good when you consider the impact of the hurricanes, Andy.

Andy Cross: Yeah, it would have been a little bit better had the hurricanes not, unfortunately, hit. 45% of Delta's U.S. revenues are tied to the southeast, and 20% specifically is tied to Florida. Overall, they're seeing some nice little gains. The big hurt is the fuel costs. The fuel costs, which are about 20% of total operating costs, were up 8% over the quarter, and they expect that to continue. The fuel costs, which are a big part of the airlines' picture toward profitability, that's going to hurt this year. But overall, Delta in particular and the airlines in general, that's one reason why Berkshire Hathaway and Warren Buffett bought into them, they own 7.5% of Delta's stock, they're finally getting the operations right and getting the scale correct, and they're showing some nice dividends in that in both the stock and the business as well.

Hill: It didn't get a lot of attention, but Delta rolled out the newest version of its app. Delta now, if you have the app, automatically issues your boarding pass 24 hours before your flight, so there's no more check-in process. I can't see how all the other airlines immediately follow suit. Although, Southwest Airlines makes a little bit of extra revenue by getting people to pay for that.

David Kretzmann: $15.

Hill: It'll be interesting to see if they can continue with that.

Cross: Yeah, it'll be really interesting, because the check-in is a key touch-in point with travelers to be able to up-sell them maybe into an upgrade, buy more leg space, whatever it might be. So, if they are now automatically doing that, Delta's doing that, Lufthansa over in Germany has been doing this for a while now. So, Delta's not exactly the first. But it'll be interesting to see how that plays out to those ancillary fees that they can get from passengers.

Andy Cross has no position in any of the stocks mentioned. Chris Hill has no position in any of the stocks mentioned. David Kretzmann has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.