Dahlman Rose Raises 3Q Estimates On Improved Margin

In a recent report from Dahlman Rose, Delta Air Lines DAL filed an updated investor outlook for 3Q10. DAL is estimating 3Q operating margins in a range of 12%-13%. Delta continues to see an improving outlook for the remainder of 2010. The better than expected margins are due to lower than expected fuel cost of $2.30 per gallon vs. management's previous estimate of $2.33. Delta Air Line's passenger revenue has increased at a double digit rate all year and management fully expects that to continue through the remainder of this quarter. Management has reiterated on numerous occasions that DAL plans to use the free cash flow generated in 2010 and 2011 to pay down debt. Dahlman Rose is increasing 3Q EPS based on management's new guidance. Dahlman now forecasts EPS of $0.92, up from $0.88. DAL is trading up about 6% in intraday trading.