Delta forecasts quarterly earnings ahead of expectations, focuses on efficiency as growth steadies

Delta forecasts quarterly earnings ahead of expectations, focuses on efficiency as growth steadies

An Airbus A330-941 is being delivered to Delta Air Lines, flying from Toulouse Blagnac Airport to Atlanta, in Toulouse, France, on December 8, 2023. 

JoanValls | Nurphoto | Getty Images

Delta Air Lines swung to a profit in the first quarter, and CEO Ed Bastian said bookings for both leisure and business travel are strong as the peak travel season approaches, despite persistent inflation.

“Consumers continue to prioritize travel as a discretionary investment in themselves,” Bastian said in an interview.

Delta forecast second-quarter earnings of $2.20 to $2.50 per share, while analysts forecast between $2.23 per share on average, according to LSEG, formerly known as Refinitiv. It said revenue in the current period could rise as much as 7%, ahead of analysts’ estimates. Delta also reiterated its full-year forecast for $6 to $7 a share and free cash flow of between $3 billion and $4 billion.

Business travel improved in the last quarter and solid demand is likely to continue, executives said, citing 14% growth in corporate travel sales. They called out the technology, consumer and financial services sectors as particularly strong.

Delta has slowed hiring, like other carriers, after a massive spree in the wake of the pandemic, and is focusing more on efficiency. Bastian told CNBC that the company’s headcount will likely be up low single digits this year compared with 2023.

Here’s how the company performed in the three months ended March 31, compared with Wall Street expectations based on consensus estimates from LSEG:

  • Adjusted earnings per share: 45 cents vs. 36 cents expected.
  • Adjusted revenue: $12.56 billion vs. $12.59 billion expected.

The carrier made $37 million, or 6 cents per share, in the first three months of the year, up from a loss of $363 million, or 57 cents per share, in the year-earlier period, it said Wednesday. Delta’s adjusted earnings of $288 million, or 45 cents a share, rose from $163 million, or 25 cents a share in the first quarter of 2023.

Revenue of $12.56 billion, adjusted to strip out refinery sales, was up 6% from last year, and slightly below analysts’ expectations.

Delta’s unit cost, when stripping out fuel, rose 1.5% on the year. Delta said domestic unit revenue rose 3% from a year ago with airplane loads at records for the quarter, traditionally a slow period for travel. Airfare rose 1% from February to March, but was down 7% last month compared with the same month last year, according to Wednesday’s U.S. inflation report.

“Growth is normalizing and we are in a period of optimization, with a focus on restoring our most profitable core hubs and delivering efficiency gains,” CFO Dan Janki said in an earnings release.

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