Delta Air Lines (DAL 54.48, -1.00) is down 1.8% after missing second quarter expectations. Today's report comes after last week's announcement that second quarter passenger unit revenue grew 2.5% year-over-year. That announcement also featured guidance for an operating margin between 18.0% and 19.0%. Delta's initial second quarter guidance from mid-April called for unit revenue growing between 1.0% and 3.0% with an operating margin between 17.0% and 19.0%.
The air carrier reported below-consensus second quarter earnings of $1.64 per share on a 3.3% year-over-year increase in revenue to $10.79 billion, which was also just shy of expectations. Operating margin checked in at 18.79%, down from 23.19% one year ago.
Pre-tax income grew 10.3% to $1.85 billion even though severe April storms in Atlanta reduced the figure by $125 million. However, an increase in operating expenses caused operating income to fall 22.0% year-over-year, to $2.03 billion.
Delta's increase in operating expenses was mostly due to a 9.4% year-over-year increase in Salaries and related costs, which grew to $2.62 billion. In addition, aircraft fuel and related taxes jumped 17.9% year-over-year to $1.45 billion.
Looking ahead, Delta expects to see year-over-year margin expansion during the third quarter due to unit revenue improvements and a moderation of fuel prices and non-fuel costs. Operating margin is expected between 18.0% and 20.0%. Third quarter passenger revenue per available seat mile is expected to grow between 2.5% and 4.5%.
Shares of Delta Air Lines marked a record high of $55.75 on Monday. Following some backtracking over the past couple days, the stock finds itself roughly 2.3% below that record high.