Delta Air Lines Projects Strong Q2 Amid Surging Demand, Eyes Efficiency Gains

📝 SUMMARY: Delta Air Lines ($DAL) has pivoted from a challenging past to a promising future, marked by a return to profitability in the first quarter of the year. CEO Ed Bastian highlighted strong bookings for both leisure and business travel as the peak season nears, undeterred by ongoing inflation concerns. The airline anticipates second-quarter earnings to range from $2.20 to $2.50 per share, slightly edging past the average analyst prediction of $2.23 per share according to $LSEG data.

In the recent quarter ending March 31, Delta achieved adjusted earnings of 45 cents per share, surpassing Wall Street's expectation of 36 cents. This financial improvement is up significantly from the previous year's loss of 57 cents per share. Additionally, adjusted revenue reached $12.56 billion, a 6% increase year-over-year, though slightly below the forecasted $12.59 billion. This revenue excludes sales from its refinery operations, focusing purely on its core airline business.

Delta’s operational focus has shifted towards efficiency after a hiring surge post-pandemic. The company plans to moderate its headcount growth to low single digits this year compared to 2023. This strategy aligns with Delta’s broader objective of optimizing its most profitable hubs and achieving efficiency gains as stated by CFO Dan Janki.

The airline's financial health is further evidenced by a 14% rise in corporate travel sales, with significant activity in the technology, consumer, and financial services sectors. Delta also noted an overall increase in domestic unit revenue and a stable trend in airfares despite fluctuating fuel costs. With a full-year earnings forecast of $6 to $7 per share and robust free cash flow projections, Delta is setting a confident course for 2024, balancing growth with strategic efficiency enhancements.

🔍 SOURCE: https://www.cnbc.com/2024/04/10/delta-air-lines-dal-q1-2024-earnings.html