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Sun May 12, 2013
Delta to Pay Dividends, Further Boost Shares
In what Delta Air Lines is calling a “milestone,” the Atlanta-based carrier has announced a $5-billion plan to boost its stock value which includes returning a billion dollars to shareholders over the next three years.
Delta will pay a six-cents per share quarterly dividend. That accounts for half.
The carrier is also buying back $500-million in stock.
“We see this as kind of a turning point for Delta," says Trebor Banstetter, a Delta spokesman. "It’s a very important event for us because it wasn’t that long ago when the industry overall was doing very poorly financially.”
S&P Capital IQ analyst Jim Corridore says the move caused them to raise their target share price from $20 to $24.
“Delta is definitely making a bold statement about where the industry is, where they are in terms of their presence in the industry, and their interest in returning shareholder value and thinking creatively," he says.
Corridore thinks Delta is in a better position than United or American/US Airways to undertake such a move.
Still, he says a spike in oil prices, more competition or an economic decline could pose risk to Delta’s profitability.