Key Takeaways
- Delta’s first-quarter adjusted earnings reached 64 cents per share, surpassing the 58-cent forecast; sales of $14.2 billion exceeded projections.
- DAL shares soared approximately 13% during premarket hours, while competing airlines United, American, and Southwest climbed 9–11%.
- The carrier forecasts Q2 adjusted earnings between $1.00 and $1.50 per share, with the $1.25 midpoint trailing the $1.41 Wall Street estimate.
- Jet fuel expenses are projected to increase by over $2 billion during the second quarter, as prices have nearly doubled since late February amid Iran tensions.
- Delta scrapped all second-quarter capacity expansion plans and increased baggage fees to mitigate escalating expenses.
Delta Air Lines delivered first-quarter performance that exceeded Wall Street projections, propelling shares substantially higher during Wednesday’s premarket session. The positive momentum gained additional support from news of a two-week U.S.-Iran ceasefire agreement, which buoyed the entire airline industry.
The carrier reported adjusted profit of 64 cents per share for the quarter, topping consensus forecasts of 57–58 cents. Sales reached $14.2 billion, similarly exceeding analyst predictions. The strong results lifted competitors as well, with United, American, and Southwest gaining between 9% and 11% in early trading.
Looking ahead to the second quarter, Delta offered more conservative projections. Management anticipates adjusted earnings between $1.00 and $1.50 per share, with the $1.25 midpoint falling short of the $1.41 analyst consensus. The company opted against updating its full-year forecast, pointing to continued fuel price volatility.
Jet fuel costs have approximately doubled since late February, propelled by escalating tensions involving Iran. Delta anticipates paying roughly $4.30 per gallon during the June quarter, representing more than $2 billion in additional fuel expenses compared to the prior-year period.
To mitigate the financial impact, the airline is deploying multiple strategies. Its wholly-owned refinery is projected to provide a $300 million benefit in Q2, a significant increase from approximately $60 million in the first quarter as refining margins expanded. CEO Ed Bastian indicated the company expects to offset 40–50% of elevated fuel costs through ticket price adjustments during the quarter.
Delta increased checked-baggage fees on Tuesday, mirroring recent actions by United and JetBlue. Bastian suggested the fee adjustments could become permanent. “At this level of fuel, it’s hard to call anything temporary,” he remarked.
Capacity Adjustments Underway
Delta eliminated all previously planned capacity expansion for the second quarter, representing a reduction of approximately 3.5 percentage points from initial projections. Management added that future capacity plans now have a “downward bias until the fuel environment improves.”
U.S. airlines collectively have trimmed domestic capacity growth plans by more than half a percentage point since mid-March. Delta’s refinery operations and robust demand profile position it more favorably than competitors to weather the fuel price pressures.
Bastian noted that ticket bookings increased at a double-digit rate year-over-year during the past month, with positive trends extending into the second quarter. Affluent travelers specifically have demonstrated sustained spending patterns.
Wall Street Estimates Show Wide Dispersion
Analyst projections for full-year earnings span from just 15 cents to $7.50 per share, illustrating substantial uncertainty regarding future fuel price trajectories. The consensus estimate stands around $5.40–$5.52, according to LSEG and FactSet data.
JPMorgan adopted the most conservative stance, cutting its forecast from $7.05 to merely 15 cents. Analyst Jamie Baker explained the firm had “embraced” a full-year jet fuel assumption that higher ticket prices likely cannot offset — though JPMorgan retained its Overweight rating on the shares.
UBS analyst Atul Maheswari maintained a Buy rating with a $5.12 earnings estimate, while acknowledging he wouldn’t be surprised if Delta withdraws its full-year guidance altogether.
Back in January, Delta had projected full-year adjusted earnings of $6.50 to $7.50 per share. Bastian chose not to revise that range on Wednesday.
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