KINGSTON, Jamaica (AP) — A Delta Airlines jet was forced to return to the airport in Jamaica shortly after takeoff Monday because of an apparent mechanical problem in one of its engines, the company said.

The MD-88 experienced a pneumatic leak in its No. 2 engine and returned safely to the airport in Kingston, spokesman Morgan Durrant said.

The Atlanta-bound flight had 149 passengers and a crew of five.

Jamaica Fire Brigade spokesman Emilio Ebanks told RJR News in Jamaica that the plane was airborne when smoke was seen coming from it. Durrant says there was no fire.

Delta planned to re-route a new aircraft to Jamaica for the flight to Atlanta.

• Transportation
• Delta Airlines
• KINGSTON, Jamaica
• Jamaica Fire Brigade

KINGSTON, Jamaica –  Delta Airlines is reporting that an Atlanta-bound flight had to return to Jamaica shortly after takeoff because of an apparent mechanical problem.

Delta spokesman Morgan Durrant says the MD-88 experienced a pneumatic fluid leak but gave no further details on the problem.

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Jamaica Fire Brigade spokesman Emilio Ebanks told RJR News in Jamaica that the plane was airborne when smoke was seen coming from it. Durrant says there was no fire.

The jet landed safely Monday in Kingston with 149 passengers and a crew of five. Delta planned to re-route a new aircraft to Jamaica for the flight to Atlanta.

Delta Air Lines Inc.

(
DAL

) is consolidating itself in the Caribbean market with its recently
announced non stop services connecting Barbados with both Atlanta
and New York. Notably, Delta Airlines is resuming its operation in
Barbados after a gap of 3 years. The flights will be operational
effective Dec 4, 2014.

Delta Airlines will be operating twice weekly between its New
York and Atlanta hubs, connecting Barbados. Scheduled for Thursdays
and Saturdays, the flights will start simultaneously from New York
and Atlanta. The first one will fly to Barbados and then on to
Atlanta while the one from Atlanta will initially land at Barbados
before flying to New York.

The Atlanta-based premier carrier will use
The Boeing Co.

‘s (
BA

) 737 narrow bodied jets on the route which boast 16 seats in the
business class and 144 seats in United Economy, of which 18 are
economy comfort seats with additional legroom. Passengers can enjoy
television programs from
DISH Network Corp.

(
DISH

) aboard the flight.

Notably, Delta Airlines had started flying to Barbados from
Atlanta in 2006. Eventually, it discontinued its services therein
in 2011 owing to low demand. This time Delta has strategically
connected Barbados with New York and Atlanta to provide passengers
access to various cities across the U.S. and around the world from
these two major hubs. The Barbados flights add to Delta’s extensive
presence within the Caribbean community, where it already flies to
Aruba, Bermuda, Haiti, St Maarten and Grand Cayman Island.

The Caribbean remains a strong point for Delta’s rival
JetBlue Airways Corporation

(
JBLU

), where the carrier offers non stop service to 25 destinations. Of
late, Southwest Airlines also flagged off services to the
Caribbeans in a bid to grab market share from JetBlue.

We believe with the U.S. economy improving, the recommencement
of service at the island country from two of the most well
connected U.S. destinations will increase scope for Barbados-bound
traffic, thus boosting Delta Airlines’ performance.

Delta Airlines currently sports a Zacks Rank #1 (Strong
Buy).

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Zacks Investment
Research

Airline stocks remained low-keyed over the past 5 trading sessions due to almost muted market activity. While U.S. oil prices slipped last week on supply data that was relatively stronger than expected, Brent crude – the global price benchmark – continued to trade higher, close to its  nine-month high, given intensifying turmoil in Iraq. Consequently, airline stocks felt the pressure. Further, FOMC’s downward revisions in GDP growth estimate likely added to the market woes for these stocks.

The past week’s major events include expansion plans undertaken by United Airlines and Delta Airlines Inc. (DAL–Free Report). The release of the annual integrated report on airline performance by Southwest Airlines Co. (LUV–Free Report) also remained in the limelight.

Recap of Last Week’s Most Important Stories

1.    United Airlines – the wholly owned subsidiary of United Continental Holdings Inc. (UAL–Free Report) announced its plans to introduce a daily service between Santiago, Chile and George Bush International Airport in Houston from Dec 7, 2014. The carrier also expects to begin services to Dominican Republic and Belize from Dec 20. All the new route launches are subject to regulatory approvals. (Read More: United Airlines to Extend Latin and Central American Network)

2.    Delta Airlines further strengthened its Seattle hub by launching a non-stop service to Hong Kong on June 16. The Atlanta-based airline is operating flights on the Hong-Kong route all days of the week except Sunday. Delta will operate a 234 capacitor Airbus 330-200 aircraft for the route having both business and economy class cabins powered with in-flight Wi-Fi. (Read More: Delta’s Non Stop Seattle-Hong Kong Service Takes Off)

3.    JetBlue Airways Corporation (JBLU–Free Report) flagged off Mint − its premium service offering, between New York’s John. F. Kennedy (:JFK) and Los Angeles International Airport (:LAX) – at an attractive one way fare of $599. Mint includes 16 lie-flat first class seats including 4 private suits, which will be the widest and the longest seats available within the domestic market. The airline has also tied up with leading New-York city based restaurant Saxon + Parole to provide a specially designed menu for Mint passengers on board. (Read More: JetBlue’s Mint to Beef Up Comfort Travel)

4.    Southwest Airlines released its fifth annual integrated report – 2013 One Report. The report, based on three fundamentals, namely performance, people and planet, highlights the productivity and efficiency in the company’s operations over the past one year. The 2013 One Report achieved a Global Reporting Initiative (GRI) B+ level.

5.    American Airlines Group Inc. (AAL–Free Report) announced the expansion of its domestic and international service from Los Angeles International Airport (:LAX). The latest expansion strategy offers increased access to customers across the carrier’s global network through one of its key hubs.

Performance

The following table shows the price movement of the major airline players over the past 5 trading days and during the last 6 months:

Over the trailing 5 trading sessions, all the airline stocks listed above exhibited price declines, except American Airlines, which gained 1.2%. 

Biggest losers over the period were United Continental Holdings, GOL LinhasAereas SA (GOL–Free Report) and Hawaiian Holdings, Inc (HA–Free Report), with their stock prices declining 4.5%, 3.3% and 2.5%, respectively.

Over the past 6 months, most of the stocks have fared reasonably well with the exception of Copa Holdings, which has dropped 9.2% over the period. The biggest gainers in the 6-month span were American Airlines Group and Hawaiian Holdings, sporting growth of 64.5% and 50%, respectively.

What’s Cooking in the Airline Biz?

In the current week, we foresee no significant recovery in the global as well as the U.S. market that can uplift the price potential of airline stocks. As a result, we continue to expect sluggish trading for the remainder of this week.

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• Airline Industry
• Finance
• Delta Airlines
• United Airlines
• Southwest Airlines
• American Airlines
• JetBlue
• United Continental Holdings

Delta Air Lines Inc. (DAL) is consolidating itself in the Caribbean market with its recently announced non stop services connecting Barbados with both Atlanta and New York. Notably, Delta Airlines is resuming its operation in Barbados after a gap of 3 years. The flights will be operational effective Dec 4, 2014.

Delta Airlines will be operating twice weekly between its New York and Atlanta hubs, connecting Barbados. Scheduled for Thursdays and Saturdays, the flights will start simultaneously from New York and Atlanta. The first one will fly to Barbados and then on to Atlanta while the one from Atlanta will initially land at Barbados before flying to New York.

The Atlanta-based premier carrier will use The Boeing Co.’s (BA) 737 narrow bodied jets on the route which boast 16 seats in the business class and 144 seats in United Economy, of which 18 are economy comfort seats with additional legroom. Passengers can enjoy television programs from DISH Network Corp. (DISH) aboard the flight.

Notably, Delta Airlines had started flying to Barbados from Atlanta in 2006. Eventually, it discontinued its services therein in 2011 owing to low demand. This time Delta has strategically connected Barbados with New York and Atlanta to provide passengers access to various cities across the U.S. and around the world from these two major hubs. The Barbados flights add to Delta’s extensive presence within the Caribbean community, where it already flies to Aruba, Bermuda, Haiti, St Maarten and Grand Cayman Island.

The Caribbean remains a strong point for Delta’s rival JetBlue Airways Corporation (JBLU), where the carrier offers non stop service to 25 destinations. Of late, Southwest Airlines also flagged off services to the Caribbeans in a bid to grab market share from JetBlue.

We believe with the U.S. economy improving, the recommencement of service at the island country from two of the most well connected U.S. destinations will increase scope for Barbados-bound traffic, thus boosting Delta Airlines’ performance.

Delta Airlines currently sports a Zacks Rank #1 (Strong Buy).

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Zacks Investment Research

• Airline Industry
• Travel Transportation
• Delta Air Lines Inc.
• Barbados
• Atlanta
• New York

In Atlanta, Georgia this morning Delta Airlines is celebrating the grand re-opening of its flight museum. The facility, which is housed in two hangars on the campus of its headquarters, had its soft opening on May 19 and as of today will be officially open for general admission.

Earlier generations of the museum featured Delta’s first passenger-ferrying DC-3 aircraft, as well as an entire Boeing Boeing 767 donated to the museum by the company’s employees. With expansion and remodeling, the new museum now houses a spectrum of aircraft and ephemera from the company’s history as well as exhibits from its family airlines including Northwest, Chicago Southern and Pan Am. The redesigned museum also includes event space for up to 1,200 people underneath the wings of the 767, a venue that directly competes with Seattle’s museum of flight and its SR-71 Blackbird. Indeed, next year’s Freddie awards, the annual competition for best travel industry loyalty plan, are scheduled to take place at the Delta Flight Museum.

The Main Floor of the Delta Flight Museum

The Main Floor of the Delta Flight Museum

Delta Flight Museum Entrance Sign

Perhaps the best part about the museum, however, is the flight simulator. A full-fledged Boeing 737-200 simulator will be installed in the museum for general visitor bookings, the only of its kind and complexity open to the general public in the country. The experience provides a full hour of flight briefing and operation on a platform very similar to what Delta pilots use.

Admission to the museum will cost $6 for children, $9 for seniors and $12 for adults, while a session on the flight simulator will cost a whopping $395. For a once-in-a-lifetime experience, however, many will justify the cost. Tickets can be booked in advance at deltamuseum.org.

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The photo selection was problematic because giraffes don’t actually live in Ghana. They are typically found further east, between Chad and South Africa, although some species were known to live in parts of Nigeria. While there is no guarantee that no giraffe has ever entered Ghana, even a travel website promoting the country admits: they don’t live there. 

The post set off a flurry of condemnation from people who saw the Delta tweet as an insidious form of racism.

While some Twitter commenters promised to never fly with the airline again, others felt critics were being too sensitive. 

“I hope you realise saying things are racist when they are not is not helpful to those who are actually victims of racism,” one user posted.

I’m guessing that when you book a flight to any of Nigeria or Kenya or the Ivory Coast or Ghana, @Delta tickets just say ‘Africa, whatever’

— Bruce Arthur (@bruce_arthur) June 17, 2014

Can’t say I’m too surprised Delta doesn’t know where giraffes live. They think Atlanta is on the way to everywhere.

— Ian Actual (@iboudreau) June 17, 2014

my last @Delta flight pic.twitter.com/HUv1QVEzvA

— k8 (@rolling_2) June 17, 2014

Delta made a racist tweet about Africa; realized Ghana doesn’t have giraffes; then deleted it http://t.co/npLYgrGQA5 pic.twitter.com/SHBvjrAqkI

— Ben Norton (@HeartsMindsEars) June 17, 2014

But for Adelaide-based football writer Andy Cussen, the ‘giraffe-gate’ demonstrated classic ignorance.

“It’s racial stereotyping which is a form of racism. Sorry if people are offended by people being offended,” he wrote.

Delta Airlines later deleted and apologised for its “precious tweet”, before deleting that apologising instead for its “previous tweet”. All things considered: a day its social media manager will try to forget.

We’re sorry for our choice of photo in our previous tweet. Best of luck to all teams.

— Delta (@Delta) June 17, 2014

The incident comes only two months after rival airline US Airways caused a storm when it accidentally tweeted a graphic photo of a woman inserting a model plane into her vagina. 

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Investing in Delta Airlines: A must-know company overview (Part 14 of 14)

(Continued from Part 13)

DAL valuation

For airline companies, EV/EBITDAR (enterprise value to earnings before interest, tax, depreciation, amortization, and rent) is a better valuation metric than the P/E (price-to-earnings) ratio for two reasons.

1. Airline companies generally have high debt levels. Price multiples don’t consider debt, while EV multiples do.
2. Airline companies also have high leases, as aircraft can either be purchased or leased and multiples vary accordingly. EV/EBITDAR is considered after adding back lease rentals in order to make companies with different lease and ownership structures comparable.

Delta’s EV/EBITDAR is 6.6x, and it’s trading at an 8% premium to its peer average. Its forward EV/EBITDA multiple and P/E ratio are close to the peer average. As the table above shows, Delta is well ahead of its peers, with the highest margins and a forward EV/EBITDA multiple of 5.3x for a high forward EBITDA margin of 17.11% that’s justified compared to Southwest’s (LUV) forward EBITDA multiple of 5.6x for a forward EBITDA margin of 14.97%. A similar comparison for all other competitors reveals that lower multiples are coupled with lower forward margins compared to Delta. American Airlines (AAL) has a forward EBITDA multiple of 5.4x, close to Delta’s, but with a much lower forecasted EBITDA margin, at 14.07%. United’s (UAL) EBITDA margin also stands low, at 9.86% for a 4.7x EBITDA multiple. Jet Blue (JBLU), however, is slightly better, with a forward EBITDA margin of 13.98% for a 4.9x EBITDA multiple.

Moreover, with high ratings in most customer surveys, strong fundamental performance in terms of increasing operational efficiency, good cash flow generation, and a promising five-year target, Delta is well positioned to generate good returns for investors. Delta expects an operating margin between 11% and 14%, EPS (earnings per share) growth of 10% to 15% after 2014, ROIC of 15% to 18%, $6 billion in operating cash flow, $3 billion in free cash flow, and $5 billion in adjusted net debt by 2016.

Browse this series on Market Realist:

• Part 1 – Investing in Delta Airlines: A must-know company overview
• Part 2 – Delta Airline’s key operating segments and geographic segments
• Part 3 – Why Delta Airlines scores highly on customer satisfaction surveys

• Finance
• Investment Company Information
• Delta Airlines
• American Airlines

Investing in Delta Airlines: A must-know company overview (Part 13 of 14)

(Continued from Part 12)

A dividend and share buyback program provides direct benefits to shareholders by proving regular income and better returns on investment

Stock dividends and share repurchases are generally declared by companies with excess cash after meeting working capital requirements, investments in expansion plans, and debt obligations. This excess cash is called “free cash flow” and is available to equity holders. Delta’s (DAL) operating cash flow is high ($4.5 billion) compared to its peers, so it manages to have a positive free cash flow even after meeting its capital expenditure ($2.57 billion). Capital expenditure is generally high in the airline industry. Delta manages to keep it low through its strategy of buying used aircraft.

In 2013, the cash generated from the operation of Delta’s competitors was as follows.

• American Airlines (AAL)—$1.44 billion
• United (UAL)—$0.68 billion
• Jet Blue (JBLU)—$0.76 billion
• Southwest (LUV)—2.48 billion

• Dividend: Dividends provide investors with regular income, so investors are attracted to dividend-paying shares. Delta declared its intension to increase its dividend by 50% to $0.09 per share from the current $0.06 per share from September 2014. 

• Share buybacks: Share buybacks result in accretion of EPS (earnings per share) resulting from a decreased number of shares, which in turn can increase share prices. In addition to declaring dividends, Delta has scheduled a $2 billion share repurchase program to be completed by 2016.

Indirect benefits to shareholders through reduced risk and leverage levels

Shareholders can expect to indirectly benefit from Delta’s planned accelerated debt reduction program. Delta’s debt adjusted for operating leases has decreased by 40% from 21.7 billion in 2009 to 12.8 billion in 1Q14, and the company targets reaching adjusted net debt of $5 billion in 2016. Debt reduction will result in reduced interest expenditure, increasing earnings and share prices. Moreover, investors’ confidence in the stock should increase as debt levels decrease and leverage ratios improve.

Continue to Part 14

Browse this series on Market Realist:

• Part 1 – Investing in Delta Airlines: A must-know company overview
• Part 2 – Delta Airline’s key operating segments and geographic segments
• Part 3 – Why Delta Airlines scores highly on customer satisfaction surveys

• Airline Industry
• Finance
• Delta Airlines
• American Airlines

Giraffes are not a native species to Ghana.Twitter/Fast Company

Delta Airlines is facing a social media firestorm after posting a congratulatory tweet in the wake of U.S. team 2-1 World Cup victory over Ghana and incorrectly representing the country with a picture of a giraffe. 

The post featured the final score, with pictures meant to represent the two countries. The victorious U.S. was depicted as the Statue of Liberty and Ghana was represented by giraffe, expect there are no giraffes in Ghana. Twitter users who saw the post called the image racist and ignorant.

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WOW @Delta. With ALL the #Africa traffic business you get, you think #Gha is only a SAFARI w giraffes?? Major business #travel #FAIL #US

— Semhar (@Semhar) June 17, 2014

Most ignorant and racist thing this week “@Delta: We’re sorry for our choice of photo in our previous tweet. Best of luck to all teams.”

— zellie (@zellieimani) June 17, 2014

@Delta go home you’re drunk

— viewfrom327 (@viewfrom327) June 17, 2014

While many posters were upset, some found humor in the situation.

I mean, there’s probably a zoo in Ghana with a giraffe.

— Josh Barro (@jbarro) June 17, 2014

I remember when I was in Ghana riding my giraffe on the beach @Delta

— Hambone (@Menphyel7) June 17, 2014

Someone at Delta was made aware of the gaffe and the offending tweet was removed, but not before Fast Company and other websites were able to capture screen shots.

An apology appeared soon after.  

We’re sorry for our choice of photo in our previous tweet. Best of luck to all teams.

— Delta (@Delta) June 17, 2014