Delta Air Lines guided high for the current quarter and maintained full-year guidance Thursday, after first-quarter earnings fell short of views. DAL stock reversed lower, falling further below a key level.
A day earlier, American Airlines hiked its earnings outlook but still fell short of consensus views, sending other airline stocks lower.
Delta's earnings report kicks off quarterly results for airlines and the overall travel sector.
Delta Earnings
Estimates: Analysts polled by FactSet expected Delta to swing to earnings of 29 cents per share vs. a $1.23 loss a year ago.
Revenue was seen jumping nearly 36% to $12.675 billion. But that would mark the seventh sequential quarter of slowing sales growth.
Results: Delta reported adjusted EPS of 25 cents. Revenue came in at $12.759 billion.
The Q1 results "reflect the strength in the underlying demand environment and continued momentum in premium products and loyalty revenue," Delta said in an earnings release early Thursday. That was offset by higher fuel and wage costs.
The company also reported "record advance bookings for the summer," which is peak travel season. "We expect June quarter revenue to be 15% to 17% higher on capacity growth of 17%, year over year," Delta President Glen Hauenstein said in the statement.
Outlook: For the current Q2, Delta guided a 15%-17% revenue increase, vs. FactSet estimates for a 5.6% gain. It guided EPS of $2.00-$2.25, also above forecasts for $1.66.
For the full year, Delta reaffirmed guidance for EPS of $5-$6. It also backed the target for a 15%-20% revenue increase and free cash flow of more than $2 billion.
At the midpoint of $5.50, its 2023 EPS guidance is above Wall Street forecasts for $5.36, which represents a nearly 68% increase from 2022. Heading into Thursday's report, analyst consensus projected a 10% revenue increase for the full year, as well as free cash flow of $2.016 billion.
DAL Stock
Shares of Delta Air Lines turned lower in stock market trading Thursday afternoon, shedding 1.1% to 33.37 after rising as high as 34.11 earlier in the session. DAL stock fell further below the 200-day moving average and remains well below a falling 50-day average.
AAL stock dipped 0.4% and UAL stock rose 1.3% Thursday. American Airlines shares dived 9.2% and United Airlines sank 6.5% Wednesday.
AAL stock cut sharply below its 200-day line on Wednesday.
Market Rally Stages Bullish Rebound; Big Bank Earnings Due
Airline Stock Hikes Earnings Outlook, But Not Enough
American Airlines lifted its Q1 earnings outlook on Wednesday, but still fell short of consensus views.
The company now expects EPS between 1 and 5 cents for the quarter, up from previous guidance for flat earnings vs. the same quarter a year ago. The 3-penny midpoint of the guidance was below the 5-cent forecast by analysts surveyed by FactSet. FactSet subsequently lowered its consensus number to 4 cents.
American also said it expects a 25.5% increase in its total revenue per available seat mile, in line with prior guidance.
In mid-March, heading into earnings season, United Airlines warned on profits for the first quarter, raising demand concerns.
The profit warning surprised the market. While companies in other sectors have warned of recession risks, airlines had up to then forecast strong demand. Commercial air travel is recovering after the Covid-19 pandemic.
Unlike United, Delta Air Lines in mid-March maintained its Q1 outlook. It said travel demand is strong and getting stronger.
As recession worries refuse to fade, Delta Chief Executive Ed Bastian told Reuters Wednesday that the carrier would double down on more profitable premium travel to defend against an economic downturn.
The airline plans to offer 15,000 more premium seats a day across its network this year vs. the pre-pandemic period. It declined to share more details.
On April 6, United Airlines said it has expanded its flying by 25% vs. last year, citing a "sharp increase" in demand for travel outside of the U.S.
The carrier reports for Q1 late on April 18.
