Nurphoto | Nurphoto | Getty Images
Delta Air Lines reported its highest-ever quarterly revenue and profit, thanks to tremendous travel demand that has defied fears of an economic slowdown for months.
International travel and demand for premium seats like first class stood out in the second quarter, while a 22% decline in Delta’s fuel costs boosted the airline’s bottom line.
The Atlanta-based airline on Thursday raised its 2023 earnings guidance to an adjusted $6 to $7 per share, compared to its estimate last month, which was at the high end of a $5 to $6 per share range. Delta shares rose more than 4% in premarket trading following the results.
CEO Ed Bastian said he expects consumer desire to travel to drive bookings for years to come, calling the current period the “middle” of travel growth.
“I think the trends that we’ve seen this year will continue,” he said in an interview.
Bastian said international demand will remain robust into the fall and he expects business travel bookings to pick up slowly but steadily.
Delta is the first US airline to report second-quarter results, and its report sets an upbeat tone for the rest of the year. United Airlines and American Airlines are expected to report next week.
In the third quarter, Delta expects to post earnings of $2.20 to $2.50 per share on a 16% increase in capacity, ahead of analyst expectations. The airline forecast a revenue jump of up to 14% year-over-year.
Here’s how Delta performed for the quarter ended June 30, compared to Wall Street’s expectations based on Refinitiv’s consensus estimates:
- Adjusted earnings per share: $2.68 cents versus $2.40 expected.
- Adjusted Revenue: $14.61 billion versus $14.49 billion expected.
Transatlantic traffic was particularly strong in spring and early summer, with revenue from these voyages increasing more than 60% year-on-year, compared with an 8% increase in domestic revenue and a 21% increase in overall passenger revenue. Delta and its competitors have increased capacity to Europe in anticipation of a resurgence this year. (Bastian told CNBC he recently traveled to the south of France.)
Premium ticket revenue growth also outpaced main cabin economy growth.
Unit revenue, a measure of how much airlines earn for each seat they fly a mile, rose 1% year over year and capacity rose 17%.
“If you were asking about a quarter where we increased capacity in the high double digits and maintained our overall pricing, that would be pretty amazing,” said Bastian.
Delta’s net income for the quarter was $1.83 billion, or $2.84 per share, up from $735 million, or $1.15 per share, a year ago. Adjusted for certain items, earnings per share were $2.68, up from $1.44 in the prior year period.
The airline’s net income was the highest since the fourth quarter of 2013, when the airline booked more than $8 billion in tax loss credits back onto its balance sheet.
Delta generated sales of $14.61 billion in the three months ended June 30, adjusted for sales from its refinery, up 19% year over year and ahead of analysts’ estimates. Total revenue was $15.58 billion, up 13% year over year.