Delta soars above bumpy weather

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Delta Air Lines shares climbed to the highest level since its emergence from bankruptcy protection seven years ago after the airline reported a rise in passenger revenues in February despite severe weather that hampered results at its peers.

The third-largest US carrier said passenger revenue per available seat mile – a key airline metric – rose 4 per cent in February from a year earlier as flights to Latin America and those across the US were filled to a great capacity.

Delta was forced to cancel 8,000 flights during the month, adding to nearly 4,000 cancellations in January. The company said it flew 11.2m passengers in February, a 1 per cent rise from a year earlier.

Wall Street analysts expect Delta to report first-quarter profits of $247m on sales of $8.9bn, 5 per cent higher than one year ago.

The figures were considerably better than those reported by United Airlines days ago, which showed 22,500 cancellations in the same period.

That, coupled with a late Easter and spring holiday for many schools, will crimp United passenger revenues per available seat mile between 0.5 and 2.5 per cent in the quarter.

Nonetheless, airlines have been one of the bright spots for US equity markets since the year began with carriers making up four of the five best performing members of the Dow Jones Transportation Index.

Delta shares advanced 5.7 per cent on Tuesday to $34.45.

JC Penney shares jumped 4.1 per cent to $8.29 after rating agency Standard & Poor’s raised its outlook on the company from neutral to stable, indicating the possibility of a downgrade in the coming months has receded.

Standard & Poor’s said the retailer, which has struggled since its failed turnround by former chief executive Ron Johnson, had made progress and “stabilised” its business.

The rating agency noted the company’s liquidity position was “adequate” to service its debts this year.

Last Wednesday, JC Penney said it expected to finish 2014 with $2bn in cash and cash equivalents, roughly the same as at the end of last year, and grow same-store sales 3 to 5 per cent in the first quarter.

The company has $5.5bn in debt outstanding, including $2.5bn due in 2018.

“However, we believe the company’s capital structure is unsustainable in the longer term but it does not have any meaningful maturities over the next 12 months and so we do not see a clear path to default,” analyst David Kuntz said.

The rating agency affirmed JC Penney’s ‘CCC+’ rated debt.

Qualcomm, the maker of chips used in mobile phones, sweetened its returns for shareholders ahead of its annual meeting today, sending its shares 3.4 per cent higher to $76.11.

The San Diego-based company announced a 20 per cent increase in its quarterly dividend from 35 to 42 cents, as well as a $5bn boost to its share buyback programme.

The new scheme lifts the outstanding buyback authorisation to $7.8bn as Qualcomm purchased $2bn in shares over the past five months.

“Our business continues to generate strong operating cash flows driven by the global adoption of our advanced technologies, including 3G and 4G, enabling us to continue to invest in our strategic growth opportunities,” chief executive Paul Jacobs said.

Bond insurer MBIA jumped 11.4 per cent to $14.84 after it said it reduced its exposure to soured loans in the fourth quarter. Profits in the period fell 79 per cent from a year earlier to $132m.

Overall, US equity markets rose sharply on Tuesday as Russian President Vladimir Putin appeared to step back from a threat to push further into Ukraine.

The S&P 500 climbed 1.5 per cent to 1,873.91, a new record high, while the Dow Jones Industrial Average advanced 1.4 per cent to 16,395.88. The technology-heavy Nasdaq Composite rose 1.7 per cent to 4,351.97.

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