text size
Delta Air Lines on Thursday reported second-quarter earnings that beat analysts’ estimates.
Mario Tama/Getty Images
Delta Air Lines reported record second-quarter revenue and profitability and raised its full-year earnings guidance on strong demand and lower fuel costs.
The stock rose nearly 4% after the airline announced earnings on Thursday.
Delta (ticker: DAL) reported adjusted earnings per share of $2.68 on revenue of $14.6 billion. Analysts were expecting earnings of $2.40 per share on sales of $14.4 billion. Earnings also beat Delta’s own guidance of $2.25 to $2.50 per share.
Operating profit of $2.5 billion was also a record, the airline said. Full-year earnings per share guidance has been raised to $6-7 from a previous $5-6.
This is breaking news. Preview TK’s earnings below and check back soon for more analysis.
Delta Air Lines is experiencing a record summer in the air and on the stock market. The airline’s second-quarter results on Thursday will show how well the peak travel season is going and whether the good times can continue.
The stock enjoyed a record 15-day winning streak between the Thursday before Memorial Day weekend and June 15, rising 23% over the period. Shares have continued to rise since the streak ended, and are up 48% so far in 2023.
Strong travel demand, particularly from Americans looking to fly abroad, and lower fuel costs were the main reasons behind the record-breaking streak. Delta (ticker: DAL) reinstated its dividend for the first time since suspending payouts in March 2020, which helped the dividend last a few more days last month.
Shares rose again in late June after the airline raised its second-quarter earnings guidance to $2.25-$2.50 per share from an earlier guidance of $2-$2.25. Full-year guidance was also raised to the high end of the $5 to $6 per share range.
The stock’s success and recent upgrade in forecasts mean it’s still quite a while before stocks make any meaningful move higher. But after a record-breaking July 4 bank holiday weekend, that’s not out of the question.
Expectations have risen in recent months as initial doubts about demand and fears of a slowdown in consumer demand over the summer have evaporated. Analysts are currently expecting earnings per share (EPS) of $2.40 on sales of $14.4 billion. That would be earnings growth of 67% compared to the year-ago period and revenue growth of 17%.
At the end of March, analysts were expecting earnings per share of $1.63, compared to $2.40 they were currently forecasting.
There’s reason to believe that Delta could even exceed those expectations, especially after the July 4 travel period. The last day of the quarter, Friday, June 30, was the busiest air travel day ever as the Transportation Security Administration screened more than 2.88 million passengers, beating the previous record set on Sunday after Thanksgiving in 2019. The holiday was of disruptions, which are not expected to have a significant impact on earnings.
Delta’s third-quarter earnings guidance could be the metric to watch for investors. Analysts are currently expecting earnings per share of $2.07.
Conor Cunningham, an analyst at Melius Research, expects the sector’s second-quarter results to come in above expectations on the back of higher sales and lower fuel costs. Looking ahead to the third quarter, he said Delta is among those that are well-positioned to continue doing well.
“Industry dynamics remain constructive, but especially for airlines with an international footprint,” he said. “Given the comparisons and impact on margins, the third-quarter situation remains more compelling for Delta, United Airlines (UAL) and American Airlines (AAL) than for domestic growth carriers.”
Delta recently raised its guidance, so an earnings surprise may be less likely than some of its peers. However, as the first airline to take off this earnings season, it will set the mood in the industry and set the route for the likes of United and American.
Write to Callum Keown at [email protected]