Delta Air Lines take off on tripled profits

Shares of Delta Air Lines bounced after the carrier said first-quarter profits tripled and added that it would reduce seating capacity on overseas flights.

The US airline reported profits of $746m or 90 cents a share, compared to $213m or 25 cents a share in the year ago period. On an adjusted basis, Delta reported earnings of 45 cents a share, ahead of forecasts for 44 cents.

Sales rose 5 per cent to $9.4bn in line with expectations.

On the earnings call, the company said revenue per available seat mile should decline 2-4 per cent in the second quarter, better than buy side expectations for a decline of 3-5 per cent, according to Helane Becker, an analyst at Cowen & Co.

Delta also said it would reduce international capacity by 3 per cent year-on-year for the winter period.

In the December quarter, the company said it expects a 15-20 per cent cut in service from Japan, a 15 per cent reduction in Brazil and 15-20 per cent reductions in Africa, India and the Middle East. It also said it would suspend operations in Moscow over winter.

"This is music to the ears of many investors who believe Delta should not overgrow capacity," Ms Becker said. "The international capacity reductions will be focused on countries that have been hardest hit by the strength of the US dollar," she added.

Delta shares, which have gained 36 per cent in the past year, climbed 3 per cent to $44.20 and were among the best performers on the S&P 500.

Intel shares gained 4 per cent to $32.83, after the US chipmaker announced a 3 per cent rise in profits and said sales were being driven by the "internet of things".

The company reported first-quarter profits of $2bn or 41 cents a share, on sales of $12.8bn, largely in line with analysts' estimates.

Revenue from the Internet of Things Group slipped sequentially but rose 11 per cent from the same period a year ago to $533m. "Year-over-year revenues were flat, with double-digit revenue growth in the data centre, IoT and memory businesses offsetting lower than expected demand for business desktop PCs," said Brian Krzanich, chief executive.

Shares of American hospital chain HCA Holdings were buoyed after the company lifted its full-year earnings and sales expectations. President Barack Obama's overhaul of healthcare insurance, through the Affordable Care Act, has lowered the number of uninsured Americans and helped improve patient trends, the company said.

The operator now expects sales of between $39bn and $40bn this year, from previous forecasts for $38.5bn and $39.5bn. Adjusted earnings before interest, taxes, depreciation and amortisation will range between $7.55bn and $7.85bn, up from previous estimates for as much as $7.65bn.

Shares of gunmaker Smith & Wesson popped on Wednesday, after the company raised its fourth-quarter and full-year earnings and sales guidance on better than expected orders in the last quarter of fiscal 2015. Smith & Wesson shares gained more than 15 per cent to $14.97.

A rally in oil prices lifted the S&P 500 energy sector up 2 per cent on Wednesday.

The S&P 500 climbed 0.5 per cent to 2,106.63, the Dow Jones Industrial Average rose 0.4 per cent to 18,112.61. The Nasdaq Composite gained 0.7 per cent to 5,011.02.

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