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Delta Air Lines Inc. reports first-quarter results on Wednesday, and analysts are expecting a loss for a period where fuel prices rose faster than fares.
WHAT TO WATCH FOR: Commentary about how demand is holding up -- especially demand from business travelers. Delta reported better-than-expected March revenue growth and its planes were fuller in all regions.
Wolfe Trahan analyst Hunter Keay said Delta shares could suffer if it invests in an oil refinery, which it has been reported to be pursuing. On the other hand, pleasant surprises that could move the stock higher would include adding a fee for the first checked bag on flights to Europe, on top of the $100 it already charges to check a second bag. Better-than-expected cost guidance would help the shares, too, Keay wrote.
WHY IT MATTERS: Delta plans to cut 2012 flying by about 2 percent. The idea is that it will fly only the seats people are willing to pay for -- and with fewer seats, people will be willing to pay more.
Keay said Delta is "Exhibit A" for how well-placed and well-timed capacity cuts can drive passenger revenue higher. Delta has not been tempted to add flights even though prices and passenger volumes have been strong. "For this we can partly thank high and volatile fuel prices," Keay wrote.
WHAT'S EXPECTED: Analysts surveyed by FactSet are expecting a first-quarter loss of 4 cents per share on revenue of $8.33 billion. The first quarter is usually the weakest one of the year for airlines.
LAST YEAR'S QUARTER: Delta lost 38 cents per share, with revenue of $7.75 billion.