Delta Air Lines’ (DAL) first quarter results flew over expectations as travel remained resilient and a resurgence in corporate travel occurred.
Here’s how Delta performed versus consensus estimates compiled by Bloomberg:
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Adjusted net income: $288 million vs. $235 million expected
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Adjusted earnings per share: $0.45 vs. $0.36 expected
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Revenue: $12.6 billion vs. $12.5 billion expected
“We now have seen some real strong demand,” Delta Air Lines CEO Ed Bastian told Yahoo Finance. “That momentum has continued internationally. It’s continued domestically. … 12 months so far, we’ve seen the 11 highest sales days in our company’s history. That may be a powerful predictor that the spring and summer season goes to be quite healthy on the travel side.”
Delta stock moved barely higher by around 5% in premarket trading. 12 months so far, shares of the Atlanta-based airline operator are up 17.6%.
TSA passenger throughput in 2024 has been pacing ahead of last yr’s travel figures, and that’s after air travel fully bounced back above pre-pandemic levels in 2023.
“We proceed to see the strength of the transatlantic demand for the spring and summer proceed, which is great,” Bastian said. “We’re flying even higher level of capability this summer than last, and we expect our overall pricing levels are going to remain largely the similar.”
Bastian also pointed to corporate travel as a major contributor to margins in the midst of the quarter.
“We also see business travel picking up again,” he said. “That’s the reason we were able to generate the profit in the first quarter. … I feel that higher level of business demand might be very healthy in the case of filling in short-term travel gaps that we may have inside the schedule.”
Delta Air Lines is the first airline to report first quarter earnings for 2024. With its booking trends and operational differentiation, Bastian believes Delta might be the “only profitable major airline in the midst of the quarter.”
The operator reiterated its outlook for full-year earnings per share of $6 to $7 and free money flow of $3 billion to $4 billion.
Delta also provided some updates on its premium-tier push, including co-branded bank card benefits, aircraft technology, and luxury lounge launches.
Investing in its premium offerings won’t let up anytime soon as the company goals to assuage SkyMiles rewards members who were rattled by program adjustments during 2023. Top brass at Delta in the intervening time are earmarking an annual spend of $5 billion toward improving the travel experience.
Boeing aircraft deliveries delayed
While airlines remain focused on maintaining with strong travel demand, the most recent spate of Boeing (BA) aircraft issues has forced industry executives to control a number of of their long-term business plans.
Inside the early weeks of the yr, a fuselage panel dislodged from an Alaska Airlines-operated Boeing 737 Max 9 airplane during flight. The aftermath included an FAA investigation and increased oversight, a production pause for brand spanking recent Max aircraft, a companywide quality assurance day, the firing of the Max program CEO, and eventually, the departure of Boeing CEO Dave Calhoun.
While Delta’s fleet includes some Boeing planes, it doesn’t currently operate any of Boeing’s Max aircraft. Nonetheless, the carrier revised its expectation to take delivery on its order for 100 737 Max 10 aircraft to 2027 from 2025.
“We’re not expecting to see the Max 10 for at least two to three years, and I don’t think anyone can inform you exactly when it’s going to arrive,” Bastian said on the delay, adding: “I still consider in the company.”
“I feel everyone knows it’s going to take some time before they get the final level of quality and production where it should be,” Bastian continued. “And the board there decided to make a change inside the leadership. I even have a wide range of confidence in Steve Mollenkopf, who’s the brand recent chair.”
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