On Nov 20, 2013, we maintained our Neutral recommendation on Delta Airlines Inc. (DAL) based on various strategic measures like route launches, introduction of ancillary products, strong customer service and revamping of fleet structure. However, slow economic recovery, a weak cargo business and competitive threats rising out of industry consolidation remain our concerns. The passenger airline holds a Zacks Rank #2 (Buy).

Why Kept at Neutral?

We expect Delta to generate higher revenues on better service offering, capacity discipline, cost control measures and customer-focused initiatives. Good customer service and operational efficiency are expected to fuel corporate customer growth as business travelers seek quality service.

Delta will benefit from its recent strategic tie-up with Virgin Atlantic, which will start its journey from the summer of 2014. The Delta-Virgin Atlantic alliance will give additional frequent quality travel options to trans-Atlantic flyers and will promote competition in the U.S. and U.K. markets.

Delta continues to add ancillary products and services, and has introduced full flatbed seats on long haul flights as well as Wi-Fi across its fleet to attract corporate customers. The company also continues to expand its operational base through the introduction of services connecting various domestic and international destinations.

Nevertheless, the global airline industry continues to face challenges from the effects of a worldwide economic slowdown that is expected to persist in the balance of 2013. Additionally, yen depreciation and weak freight demand continue to affect the cargo revenues.

Competition remains a serious threat to Delta’s growth and will only increase once US Airways Group Inc. (LCC) and American Airlines Inc, a subsidiary of AMR Corporation merge. Recently, they got the approval to merge and the combined entity will have more pricing power and control over a larger number of slots, thus creating a bigger rival for Delta.
Other Stocks

Other stocks that are worth considering within this sector are Spirit Airline Inc. (SAVE) and Alaska Air Group Inc. (ALK). SAVE currently holds a Zacks Rank #1 (Strong Buy), while ALK carries a Zacks Rank #2.

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MASSILLON, Ohio–(BUSINESS WIRE)–

The following is an opinion editorial provided by David E. Howe, president, SubscriberWise:

“I’ve contacted Delta corporate offices and filed a complaint with the FAA after I obtained a ticket on Delta.com and the published price instantly increased following my agreement to purchase,” said David Howe, president of SubscriberWise.

“This is not the first experience I’ve had with Delta’s corporate-owned website increasing a published a fare following an otherwise successful booking,” continued Howe. “I was logged onto https://www.delta.com/ with my Delta SkyMiles account. I located a flight and selected the fare. Immediately after I completed the booking session and entered the three digit credit card information for payment, the system replied with a message that the fare increased and additional payment was now required.

“I’m outraged by what should be recognized as nothing more than a deceptive pricing scheme. There was no time-out from the website and the booking process was timely. It’s time now for the federal government to investigate this practice and enforce a policy against it. Frankly I’d appreciate if Delta’s senior executives would acknowledge their system failure and develop a solution so that when a customer selects a fare, the published price cannot increase when a payment is processed promptly for that fare.

“Although I understand the economics of supply and demand well, there’s simply no defense Delta can offer to justify an on-the-fly price increase during the time a customer chooses their itinerary, promptly completes payment, and then selects ‘agree to purchase’,” Howe emphasized. “Delta’s programmers need to modify their website so no other consumer is a victim of this scheme.

“As the majority shareholder of SubscriberWise, an issuing CRA (consumer reporting agency) for the communications industry, I understand and know well about federal regulations; there are a myriad federal regulations placed on consumer reporting agencies like the one I work for. And I certainly don’t agree with every regulation and government bureaucracy. However, even as a business owner, I understand and appreciate why U.S. consumers – including myself – must have protections from organizations that choose to engage in unethical, immoral, harmful, and sometimes even illegal practices.

“I’ve provided the FAA with documentation to substantiate exactly what happened. I encourage the FAA to investigate the matter carefully and I look forward to their (and Delta’s) response. For the record, I have no other complaints with Delta Airlines,” Howe concluded.

About SubscriberWise
SubscriberWise® launched as the first issuing consumer reporting agency exclusively for the cable industry in 2006. In 2009, SubscriberWise and TransUnion announced a joint marketing agreement for the benefit of America’s independent cable operators. Today SubscriberWise is a risk management preferred-solutions provider for the National Cable Television Cooperative. SubscriberWise technology has prevented thousands of child identity thefts and uncovered the misuse of personally identifiable information for operators everywhere. SubscriberWise contributions to the telecom industry are in excess of twenty-five million dollars annually.

SubscriberWise is a U.S.A. federally registered trademark.

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Starting next summer, San Diego will have additional nonstop service to Seattle, courtesy of Delta Airlines.

The flights, which will begin operating June 2, will depart four times a day, expanding the nonstop service already offered by Alaska Airlines.

The new Delta flights will depart at 6:45 a.m., 10:15 a.m., 2 p.m. and 5:05 p.m. Alaska Airlines is currently the only other airline offering nonstop service between San Diego and Seattle-Tacoma International Airport.

Delta’s new service between Lindbergh Field and Seattle-Tacoma International Airport will be operated by Delta Connection carrier SkyWest Airlines using 76-seat, two-class CRJ-900s. Each aircraft is equipped with first class and economy comfort seating, as well as onboard wi-fi.

“We have continued to strategically add service from key markets in an effort to support passenger demand for our expanding international destinations,” said Mike Medeiros, Delta’s vice president – Seattle. “Delta’s most recent additions will provide our customers with one-stop access to and from several of the top international and domestic destinations via our growing global gateway in Seattle.”

Premier U.S. passenger carrier Delta Airlines Inc. (DAL) insists that the Department of Justice (:DOJ) should not be biased toward low cost carriers while divesting airport slots and assets related to the proposed merger of American Airlines and US Airways Group Inc. (LCC). Recently, both American and U.S. Airways cleared all competition-related litigation raised by the DOJ along with attorneys general of six states and the District of Columbia in Aug 2013.

As part of the clearance, the airlines will have to give up 52 take-off and landing slots at Washington’s Reagan National Airport (DCA) and 17 pairs at La Guardia airport in New York (:LGA). Further, the carriers have to divest two gates and related facilities at each of the Boston, Chicago, Dallas, Los Angeles and Miami airports. The DOJ has argued that opening up of slots will induce more competition within the industry.

Delta wishes to get an opportunity to bid for slots and facilities at these airports particularly in DCA and Love Field Airport at Dallas, from where it operates non-stop flights to its international hub in Atlanta. The bidding will be through a DOJ approved process following completion of the merger, which is expected in Dec 2013.

Atlanta-based Delta has argued that if the divesture is limited to low cost carriers, it may led to reduction of flights to small and medium communities as budget airlines generally avoid these routes. Further, with their fleet of small aircraft, the carriers will be able to provide regular service from DCA and LGA to other smaller and medium size cities.

However, during the settlement procedure, DOJ hinted that low cost carriers like would be a significant part of the divesture process. Reiterating that view, recently a DOJ lawyer confirmed that carriers like Delta and United Airlines are unlikely to win slots at these airports. Others such as Southwest Airlines Co. (LUV) and JetBlue Airways Corp. (JBLU), Virgin America and Spirit Airlines (SAVE) are considering participation in the divesture process.

Winning newer landing and take-off slots will only strengthen the presence of legacy carriers like Delta in the above mentioned airports. However, it remains to be seen whether Delta will ultimately win any slot, given the inclination of the DOJ toward budget carriers.

Delta currently carries a Zacks Rank #2 (Buy).

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Soros Fund Management’s new trades in Q313 (Part 5 of 6)

(Continued from Part 4)

 

Soros Fund Management is a large private fund run by the legendary team of famed investor George Soros. In Q3 2013, it started new positions in Microsoft Corp. (MSFT), Fedex Corp. (FDX), Teva Pharmaceuticals (TEVA), and Halliburton (HAL), and sold Delta Airlines (DAL) and United Continental Holdings (UAL).

Abbreviated financial summaries and metrics for these securities are included below. Detailed analysis and recommendations require a subscription (more information at the bottom of the article).

Why sell Delta Airlines (DAL)?

Shares of airline companies including Delta Airlines soared recently on the back of a settlement of litigation on the US Airways, AMR merger deal. Delta Airlines reported positive 3Q 2013 earnings driven by strong trans-Atlantic performance and business demand in Delta’s Atlanta and New York hubs. It repurchased $100 million in stock in 3Q and paid $51 million in dividends. Analysts expect the US airline industry stocks to do well in the future because of cost cutting and consolidation efforts taken by the airline companies to improve its profits. Moreover, the declining fuel costs and economic turnaround have been favoring these companies.

Delta Airlines provides scheduled air transportation for passengers and cargo throughout the United States and around the world.

Delta Air Lines serves more than 160 million customers each year. With a leading global network, Delta and the Delta Connection carriers offer service to 314 destinations in 58 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft. The airline is a founding member of the SkyTeam global alliance and participates in the industry’s leading trans-Atlantic joint venture with Air France-KLM and Alitalia. Including its worldwide alliance partners, Delta offers customers more than 15,000 daily flights, with hubs in Amsterdam, Atlanta, Cincinnati, Detroit, Minneapolis-St. Paul, New York-LaGuardia, New York-JFK, Paris-Charles de Gaulle, Salt Lake City and Tokyo-Narita.

The current Delta Air Lines is the result of many airline mergers over a period of more than 80 years. The most recent merger was with Northwest Airlines on October 29, 2008 and at the time formed the world’s largest airline. United Continental (UAL), JetBlue (JBLU), AMR (AAMRQ) and US Airways (LCC) are some of its competitors.

 

Soros Fund Management was formerly a famed global macro hedge fund run by George Soros, a multi-billionaire investor, who is famous for betting against the British pound earlier in his career. The fund was started in 1969 and in 2010 was reported to be one of the most profitable hedge funds in history, earning over 20% annual returns over 40+ years. The firm formerly was the adviser to the famous Quantum group of funds, but now is private.

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Continue to Part 6

Browse this series on Market Realist:

• Part 1 – Soros Fund Management starts new positions in MSFT, FDX, TEVA, HAL, Sells DAL, UAL – 13F Flash (A)
• Part 2 – Soros Fund Management starts new positions in MSFT, FDX, TEVA, HAL, Sells DAL, UAL – 13F Flash (B)
• Part 3 – Soros Fund Management starts new positions in MSFT, FDX, TEVA, HAL, Sells DAL, UAL – 13F Flash (C)

• Airline Industry
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• Delta Airlines
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• United Continental Holdings

Soros Fund Management is a large private fund run by the legendary team of famed investor George Soros. In Q3 2013, it started new positions in Microsoft Corp. (MSFT), Fedex Corp. (FDX), Teva Pharmaceuticals (TEVA), and Halliburton (HAL), and sold Delta Airlines (DAL) and United Continental Holdings (UAL).

Abbreviated financial summaries and metrics for these securities are included below. Detailed analysis and recommendations require a subscription (more information at the bottom of the article).

Microsoft Corp. (MSFT):

Microsoft was founded in 1975. The Company’s mission is to enable people and businesses throughout the world to realize their full potential by creating technology that transforms the way people work, play, and communicate. It develops and markets software, services, and hardware devices that deliver new opportunities, greater convenience, and enhanced value to people’s lives. MSFT does business worldwide and has offices in more than 100 countries.

Microsoft generates revenue by developing, licensing, and supporting a wide range of software products and services, by designing and selling hardware devices, and by delivering relevant online advertising to a global customer audience. In addition to selling individual products and services, it offers suites of products and services.

MSFT’s products include operating systems for computing devices, servers, phones, and other intelligent devices; server applications for distributed computing environments; productivity applications; business solution applications; desktop and server management tools; software development tools; video games; and online advertising. It also designs and sells hardware devices including Surface RT and Surface Pro, the Xbox 360 gaming and entertainment console, Kinect for Xbox 360, Xbox 360 accessories, and Microsoft PC accessories.

MSFT offers cloud-based solutions that provide customers with software, services, and content over the Internet by way of shared computing resources located in centralized data centers. Examples of cloud-based computing services it offers include Microsoft Office 365, Microsoft Dynamics CRM Online, Windows Azure, Bing, Skype, Xbox LIVE, and Yammer. Cloud revenue is earned primarily from usage fees, advertising, and subscriptions. The Company also provides consulting and product and solution support services, and it trains and certifies computer system integrators and developers.

Fedex Corp. (FDX):

FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. These companies are included in four business segments:

FedEx Express: Federal Express Corporation (“FedEx Express”) is the world’s largest express transportation company, offering time-certain delivery to more than 220 countries and territories, connecting markets that comprise more than 90% of the world’s gross domestic product. The FedEx Express segment also includes FedEx Trade Networks, Inc., which provides international trade services, specializing in customs brokerage and global ocean and air freight forwarding, and FedEx SupplyChain Systems, Inc., which offers a range of supply chain solutions.

FedEx Ground: FedEx Ground Package System, Inc. (“FedEx Ground”) is a leading North American provider of small-package ground delivery services. FedEx Ground provides low-cost, day-certain service to every business address in the United States and Canada, as well as residential delivery to nearly 100% of U.S. residences through its FedEx Home Delivery service. The FedEx Ground segment also includes FedEx SmartPost, Inc., which specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages using the U.S. Postal Service (“USPS”) for final delivery to any residential address or PO Box in the United States.

FedEx Freight: FedEx Freight, Inc. (“FedEx Freight”) is a leading North American provider of less-than-truckload (“LTL”) freight services across all lengths of haul, offering: FedEx Freight Priority, when speed is critical to meet supply chain needs; and FedEx Freight Economy, when time can be traded for cost savings. The FedEx Freight segment also offers freight delivery service to most points in Canada, Mexico, Puerto Rico and the U.S. Virgin Islands and includes FedEx Custom Critical, Inc., a leading North American provider of time-specific, critical shipment services.

FedEx Services: FedEx Corporate Services, Inc. (“FedEx Services”) provides its other companies with sales, marketing, information technology, communications and back-office support. The FedEx Services segment also includes FedEx TechConnect, Inc., which is responsible for customer service, billings and collections for its U.S. customers and offers technical support services, and FedEx Office and Print Services, Inc. (“FedEx Office”), which provides document and business services and retail access to its package transportation businesses.

Teva Pharmaceuticals (TEVA):

Teva is an Israel based global pharmaceutical company. Established in 1901, it ranks among the 10 top pharmaceutical firms in the world. Teva is active in 60 countries, with over 46,000 dedicated employees worldwide.

As a forward-looking global pharmaceutical company, Teva spearheads the development, production and marketing of a wide range of specialty medicines, generic and OTC products, active pharmaceutical ingredients (API) and novel new therapeutic entities.

Halliburton (HAL):

Halliburton Company’s predecessor was established in 1919 and incorporated under the laws of the State of Delaware in 1924. The Company is a leading provider of services and products to the energy industry related to the exploration, development, and production of oil and natural gas. It serves major, national, and independent oil and natural gas companies throughout the world and operates under two divisions, the Completion and Production segment and the Drilling and Evaluation segment:

The Completion and Production segment delivers cementing, stimulation, intervention, pressure control, specialty chemicals, artificial lift, and completion services. The segment consists of Halliburton Production Enhancement, Cementing, Completion Tools, Boots Coots, and Multi-Chem. Effective January 1, 2013, Halliburton Artificial Lift will be included as a product service line within this segment.

The Drilling and Evaluation segment provides field and reservoir modeling, drilling, evaluation, and wellbore placement solutions that enable customers to model, measure, and optimize their well construction activities. The segment consists of Halliburton Drill Bits and Services, Wireline and Perforating, Testing and Subsea, Baroid, Sperry Drilling, Landmark Software and Services, and Halliburton Consulting and Project Management.

Halliburton has significant manufacturing operations in various locations, including the United States, Canada, Malaysia, Mexico, Singapore, and the United Kingdom.

Delta Airlines (DAL):

Delta Airlines provides scheduled air transportation for passengers and cargo throughout the United States and around the world. Its global route network gives it a presence in every major domestic and international market. Its route network is centered around a system of hub and international gateway airports that it operates in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York – LaGuardia, New York-JFK, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Each of these hub operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub or gateway to domestic and international cities and to other hubs or gateways. Its network is supported by a fleet of aircraft that is varied in terms of size and capabilities, giving us flexibility to adjust aircraft to the network.

Other key characteristics of its route network include:

• Its alliances with foreign airlines, including our membership in SkyTeam, a global airline alliance
• Its international joint ventures, particularly our transatlantic joint venture with Air France-KLM and Alitalia
• Its domestic marketing alliance with Alaska Airlines, which expands its west coast service; and agreements with multiple domestic regional carriers, which operate as Delta Connection.

Delta is incorporated under the laws of the State of Delaware. Its principal executive offices are located at Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia.

United Continental Holdings (UAL):

United Continental Holdings, Inc. is a holding company and its principal, wholly-owned subsidiaries are United Air Lines, Inc. and Continental Airlines, Inc. This combined Annual Report on Form 10-K is separately filed by each of United Continental Holdings, Inc., United Air Lines, Inc. and Continental Airlines, Inc.

The Company transports people and cargo through its mainline operations, which use jet aircraft with at least 110 seats, and its regional operations.

With key global air rights in the U.S., Asia-Pacific, Europe, Middle East, Africa, and Latin America, UAL has the world’s most comprehensive global route network. UAL, through United and Continental and their regional carriers, operates more than 5,500 daily flights to more than 375 U.S. and international destinations from the Company’s hubs at Newark Liberty International Airport (“Newark Liberty”), Chicago O’Hare International Airport (“Chicago O’Hare”), Denver International Airport (“Denver”), George Bush Intercontinental Airport (“Houston Bush”), Hopkins International Airport (“Cleveland Hopkins”), Los Angeles International Airport (“LAX”), A.B. Won Pat International Airport (“Guam”), San Francisco International Airport (“SFO”) and Washington Dulles International Airport (“Washington Dulles”).

UAL was incorporated under the laws of the State of Delaware on December 30, 1968. Its world headquarters is located at 233 South Wacker Drive, Chicago, Illinois.

Soros Fund Management was formerly a famed global macro hedge fund run by George Soros, a multi-billionaire investor, who is famous for betting against the British pound earlier in his career. The fund was started in 1969 and in 2010 was reported to be one of the most profitable hedge funds in history, earning over 20% annual returns over 40+ years. The firm formerly was the adviser to the famous Quantum group of funds, but now is private.

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Delta Airlines wants to expand its presence at Dallas Love Field now that American Airlines is giving up two gates as part of its merger with US Airways.

In a statement today, Delta says it has asked the U.S. Justice Department to allow it to bid on the Love Field gates.

If Delta gets them next year, it plans to add 18 daily nonstop flights to five destinations, including LaGuardia Airport and Los Angeles International.

Delta currently provides daily non-stop service from Love Field to Atlanta using its Express Jet service – small 50-seat planes.

WAUSAU – Your favorite treats could soon taste a bit different.

That’s because the Food and Drug Administration wants to ban trans fat from all foods.

You’ll find those fats in products like donuts, margarine and frozen
pizzas. Trans fat is a solid form of vegetable oil called. It is artificially engineered by combing hydrogen and liquid vegetable oil.

Registered Dietician Sam Bulgrim believes a ban could help people’s overall
cholesterol.

That’s because trans fats are considered the most unhealthy
fat.

“It is the bad fat because with too much trans fat, that can increase
your bad cholesterol or your, LDL, and decrease your good cholesterol
which is your HDL,” Bulgrim said.

The trans fats are cheap and help food have a longer shelf-life. That’s a plus for business, but not for health.

“With changing the composition of the type of fat, then it becomes one that is not as healthy for us,” Bulgrim said.

Bakers at Kreger Bakery and Deli in Wausau use a more expensive lard and canola instead of using trans fat. Tina Kreger says that gives her baked goods a better taste. But she believes the FDA should let people make trans fat decisions.

“Well that’s up to people because if I want a greasy hamburger, I know
its not good for me, but I’m going to eat it, people know,” Kreger said.

The FDA says a trans fat reduction could prevent more than 20,000 heart attacks and 7,000 deaths from heart disease each year.

The proposal is in a a 60-day comment period before it’s finalized.