Delta Air Lines (DAL) guided higher for the current quarter, maintaining Thursday’s full-year guidance after missing first-quarter earnings views. DAL shares rose early Thursday, leading other airline stocks.
A day earlier, American Airlines (AAL) raised its earnings outlook, but still fell short of consensus.
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Delta’s earnings report kicks off quarterly results for airlines and the travel industry as a whole.
Delta revenue
Ratings: Analysts polled by FactSet expected Delta to post earnings of 29 cents per share versus a loss of $1.23 a year ago.
Revenue was seen up nearly 36% to $12.675 billion. But that would mark the seventh straight quarter of declining sales growth.
Results: Delta reported adjusted EPS of 25 cents. 12.759 billion dollars in revenue.
The Q1 results “reflect strength in the underlying demand environment and continued momentum in premium products and loyalty revenue,” Delta said in an earnings release early Thursday. This was offset by higher fuel and labor costs.
“With booked bookings for the summer, we expect June quarter revenue to be up 15% to 17% on year-over-year capacity growth of 17%,” Delta President Glen Hauenstein said in the statement.
Outlook: In the current Q2, Delta guided for a 15%-17% revenue increase, vs. estimates for a 5.6% gain. It guided for EPS of $2.00 – $2.25, above forecasts for $1.66.
For the full year, Delta reaffirmed guidance for $5-$6 EPS, with a mid-point of $5.50. It supported a target of 15%-20% revenue growth and free cash flow of more than $2 billion.
At a mid-point of $5.50, its 2023 EPS guidance is above Wall Street forecasts of $5.36, representing a nearly 68% increase from 2022. According to Thursday’s report, the analyst consensus had forecast a 10% revenue increase for the full year, free of charge. Cash flow of $2.016 billion.
DAL stock
Shares of Delta Air Lines rose 2.6% in premarket action Thursday. They fell 2.4% to 33.74 in stock market trading on Wednesday. DAL stock closed slightly below its 200-day moving average. It is well below the 50-day moving average.
AAL shares were up 2.2% and UAL shares were up 2.9% in early Thursday trading. Shares of American Airlines fell 9.2% and United Airlines fell 6.5% on Wednesday.
AAL stock fell sharply below its 200-day mark on Wednesday.
Recession fears hit the market; Warren Buffett’s concerns slammed the stock
Airline stock boosts earnings outlook, but not enough
American Airlines raised its Q1 earnings outlook on Wednesday, but still lacked consensus.
The company now expects EPS of 1 to 5 cents for the quarter, up from its previous guidance of flat revenue in the same quarter a year ago. The 3-cent midpoint of the guidance was below the 5-cent forecast of analysts polled by FactSet. FactSet lowered its consensus estimate to 4 cents.
American also said it expects a 25.5% increase in its gross revenue per available seat mile, based on previous guidance.
In mid-March, during earnings season, United Airlines warned of first-quarter profits, raising demand concerns.
The profit warning surprised the market. While companies in other sectors have warned of the risks of a slowdown, airlines have forecast strong demand until then. Commercial air travel is recovering after the Covid-19 pandemic.
Unlike United, Delta Air Lines maintained its Q1 outlook in mid-March. It said travel demand is strong and getting stronger.
Slowdown concerns refuse to go away, Delta Chief Executive Ed Bastian said Reuters On Wednesday, the carrier said it would double down on highly profitable premium travel to protect it from the economic downturn.
The airline plans to offer 15,000 additional premium seats per day across its network this year. It declined to share further details.
On April 6, United Airlines said it expanded flight traffic by 25% from last year, citing a “sharp increase” in demand for travel outside the United States.
The carrier reports late Q1 on April 18.
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