Delta Air Lines, one of the US leading passenger and cargo carriers, issued solid report for the third quarter of 2015. Airline traffic, measured in revenue passenger miles, increased 4% y-o-y to 59.07 bn. Capacity, or available seat miles, rose 3% to 68.03 bn, while load factor (percentage of seats filled with passengers) improved 40 basis points to 86.8% as traffic growth outpaced capacity expansion. However, passenger revenue per available seat mile declined 5% to 14.10 cents, mainly due to currency woes. As a result, revenues decreased 0.6% y-o-y to $11.11 bn in the reported quarter. However, adjusted operating income jumped 32.1% to $2.33 bn, supported by lower fuel costs, and operating margin improved 520 basis points to 21%. Adjusted earnings per share soared 45% to $1.74 and came in 3 cents ahead of consensus estimate. Delta expects strong performance to continue in the December quarter, with operating margins of 16-18% and over 40% EPS growth At the end of the reported quarter, Delta had $2.37 bn in cash and cash equivalents and adjusted net debt of $6.4 bn. In Q3, the company generated free cash flow of $1.4 bn and returned $532 mn to its shareholders through dividends ($107 mn) and buybacks ($425 mn). Delta, which recently expanded its global reach by increase its stake in Brazilian carrier GOL Linhas Aereas Inteligentes, is benefiting considerably from persistent weak oil prices. With oil prices expected to remain soft for quite some time ahead, Delta should continue to witness an upside, as fuel costs account for a major chunk of an airline's operating expenses. Delta's shares, in my opinion, represent interesting medium-term investment opportunity. Target price is $55. $DAL, Delta Air Lines, Inc. / 1440