Key Takeaways
- Delta Air Lines posted record first-quarter revenue Wednesday, along with adjusted income and earnings per share that came in above analyst expectations.
- The airline’s stock jumped over 4% in premarket trading after the earnings report was released.
- Delta projected an increase in second-quarter revenue of 5% to 7% from the prior-year figure of $15.58 billion.
Delta Air Lines (DAL) shares rose in premarket trading Wednesday after the carrier reported record first-quarter revenue, with adjusted income and earnings per share (EPS) figures also topping expectations.
Delta posted an 8% year-over-year revenue increase to $13.75 billion, along with adjusted net income of $288 million, or 45 cents per share, well above analyst estimates compiled by Visible Alpha of $13.15 billion, $230.8 million, and 36 cents per share, respectively.
The airline also affirmed its full-year guidance for 2024 of EPS from $6 to $7, and projected second-quarter revenue will also set a company record for the quarter, increasing 5% to 7% from last year’s mark of $15.58 billion.
Executives said they expect the strong travel numbers they’ve seen so far this year to continue into the busier summer travel season, as Delta reported a load factor—the percentage of available seating capacity that is filled with passengers—of 83% for the quarter, up from 81% last year and within the company’s pre-pandemic averages of 82% to 88%.
Earlier this month, Morgan Stanley analysts wrote that they believed Delta to be undervalued because the airline’s financial and operational performance had largely returned to or had begun to exceed pre-pandemic levels in 2023, but the stock price was still below those levels.
The analysts also compared Delta’s potential growth arc to that of clothing retailer Abercrombie & Fitch (ANF), which has shifted to focus its business on “premium” or more expensive products, while attracting a wealthier customer base. That’s similar to Delta’s recent shift to making a larger portion of its revenue from Premium programs.
Delta said Wednesday that its Premium revenue grew 10% from last year’s first quarter, and revenue from those offerings is continuing to grow at a faster rate than Delta’s Main Cabin airfare. Main Cabin ticket revenue was $5.43 billion, up 4% from last year, while Premium ticket revenue grew 10% to $4.41 billion.
The airline posted about $250 million in mark-to-market losses related to some of the company’s investments, settlements, and hedges, meaning it reported $37 million in net income, but $288 million in adjusted net income after accounting for those one-time charges.
Delta stock jumped 4.6% an hour before the opening bell Wednesday to near $50 a share. It is up 17% on the year and 39% over the last 12 months through Tuesday’s closing level of $47.32.