Delta Air Lines (DAL) shares raced higher Wednesday after the carrier said June quarter revenues should return to pre-pandemic levels with free cash flow in the region of $1.5 billion, even as it cautioned on higher fuel costs.
In a trading update published Wednesday, Delta said the average price for its jet fuel will likely rise to between $3.60 and $3.70 per gallon this quarter, up from the $2.79 average over the first three months of the year.
Still, capacity is likely to rise to between 82% and 83%, compared to the 84% tally logged in the second quarter of 2019 levels, the carrier said, as travel demand improves heading into the summer months.
Top line revenues, Delta said, should come in between $12.4 billion and $12.5 billion, Detail said, with operating margins were forecast at between 13% and 14% helping produce free free cash flow of $1.5 billion.
"Total unit revenues are expected to be 7 to 8 points better than initially expected on capacity that is 1 to 2 points lower than planned," Delta said. "Unit revenue improvement is being driven by broad-based demand and pricing strength across consumer, business and international travel, with improvement through the quarter."
"Non-fuel unit costs are expected to be up 20 to 22% compared to June quarter 2019, above prior guidance due to lower capacity, higher revenue-related selling expenses and investments in operational reliability," the carrier added.
Delta share were marked 2.4% higher in pre-market trading to indicate an opening bell price of $42.69 each.
Delta said its adjusted loss for the three months ending in March was pegged at $1.23 per share, up from a loss of $3.42 per share over the same period last year and just inside of the Street consensus of a $1.29 per share loss.
Group revenues, Delta said, surged 125% to $9.35 billion, well ahead of analysts' estimates of a $8.83 billion tally.
