IB Net Payout Yields Model

Delta Air Lines: Cash-Flow Machine Despite Headwinds?

Don't look now, but the airlines have become massive cash-flow generators. Delta Air Lines (NYSE: DAL  ) is leading the industry, and it's forecasting an incredible operating cash flow for 2014 of over $5 billion. Most investors see cash flow as the ultimate financial indicator of corporate success, as it accurately shows how the business is performing over time. Companies can't mask the shifts in cash balances like they can with income statements; therefore, looking at cash flow provides a cleaner view of how the company is actually operating.

The amazing part about the airlines is that their vast cash flows are being generated despite high fuel costs and a sluggish economy. Delta isn't exactly experiencing roaring passenger demand, but the industry as a whole is benefiting from improved operational efficiency and reduced capacity due to mega mergers, including the recently finalized one that created American Airlines Group (NASDAQ: AAL  ).

Read the full article here.

Disclosure: Long AAL. Please review the disclaimer page for more details. 


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