Delta Air Lines earnings: ‘we’re getting ready for a strong summer’

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Delta Air Lines Inc (NYSE: DAL) is trading down this morning after reporting earnings for is fiscal first quarter that came in slightly below the Street estimates.

Delta Air Lines issues strong guidance

On the plus side, though, the air carrier now expects record revenue in its current financial quarter.

Per-share earnings, it added, will fall between $2.0 and $2.25 in Q2 – well above $1.66 that analysts had forecast. On CNBC’s “Squawk Box”, CEO Ed Bastian said:

Demand is really strong. International is going very strong. Domestic is healthy too. We’re forecasting operating profit at $2.0 billion in Q2, exactly what we made in Q2 of 2019, on lower capacity and higher fuel prices.

For the full year, the airline is calling for up to 20% annualised growth in revenue on $5 to $6 of EPS and more than $2.0 billion in free cash flow. Delta Air Lines stock has now returned to the price at which it stared the year.  

Delta Air Lines Q1 financial highlights

Lost $363 million versus the year-ago $940 million

Per-share loss also narrowed from $1.48 to 57 cents

Adjusted EPS printed at 25 cents as per the press release

Revenue climbed 36% year-on-year to $12.76 billion

Consensus was 29 cents EPS on $11.98 billion revenue

Delta Air Lines reported a 3.8% decline in its cargo and other revenue but its passenger revenue went up a whopping 50.7% in the recently concluded quarter. CEO Bastian added:

When you think about the challenges of the quarter, I suspect we’ll be the only major airline that’s meaningfully profitable. So, health of the franchise is doing quite strongly and we’re getting ready for a strong summer.

Other notable figures in Delta Air Lines Q1 results

Other notable figures in the earnings report include an 18.4% increase in capacity and 28.4% increase in traffic. Load factor jumped from 75% to 81% but still came in shy of 83.2% expected. According to the Chief Executive:

We’re the only airline with new labour contracts in place. Consumer spending may be stabilising rather than accelerating. [But] I think we’re in a multi-year recovery from pandemic that’ll be well above anything anyone expects.

Wall Street currently has a consensus “buy” rating on this airline stock.

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