Delta Air Lines (DAL) prepared to report earnings for the first quarter early Thursday after American Airlines (AAL) unexpectedly warned on profits, raising demand concerns. DAL stock fell below a key level Wednesday. AAL tumbled, dragging other airlines lower.
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Delta’s earnings report will kick off quarterly results for airlines and the overall travel sector.
As recession worries refuse to fade, Delta Chief Executive Ed Bastian told Reuters Wednesday that the carrier is doubling 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.
Delta Earnings
Estimates: Analysts polled by FactSet expect Delta to swing to earnings of 29 cents per share vs. a $1.23 loss a year ago.
Revenue is seen jumping nearly 36% to $12.675 billion. But that would mark the seventh sequential quarter of slowing sales growth.
Results: Check back before the market opens Thursday.
Outlook: For all of 2023, Wall Street forecasts Delta earnings of $5.36 per share, a roughly 68% increase from 2022. Analyst consensus is for a 10% revenue increase for the full year, as well as free cash flow of $1.847 billion.
That is generally below Delta’s guidance. In January, Delta guided 2023 EPS of $5-$6, with the midpoint at $5.50. It also guided a 15%-20% revenue increase and free cash flow of more than $2 billion.
DAL Stock
Shares of Delta Air Lines fell 2.3%, near 34, on the stock market today.
American Airlines shares fell 9% and United Airlines shares sank nearly 6% to 41.69 Wednesday. Both DAL stock and UAL stock remain well below their falling 50-day moving averages after tumbling in March. They are now testing the 200-day lines.
AAL stock cut sharply below its 200-day line on Wednesday.
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 forecast strong demand. Commercial air travel continues to recover after the Covid-19 pandemic.
Unlike United, Delta Air Lines in mid-March maintained its Q1 outlook, saying travel demand is strong and getting stronger.
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 Tuesday.
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Delta Earnings Due As Airline Makes This Bet To Defend Against Recession
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