Categories Analysis, Industrials

Delta Air Lines (DAL) sees improvement in business travel helped by small and medium business demand

Adjusted EPS is expected to be $5-6 for FY2023

Shares of Delta Air Lines Inc. (NYSE: DAL) were down 1% on Thursday after the company delivered mixed results for the first quarter of 2023. Revenue beat expectations while earnings fell short of estimates. The stock has dropped 15% over the past three months.

Quarterly performance

Delta’s operating revenue in Q1 2023 increased 36% year-over-year to $12.8 billion, beating estimates of $11.9 billion. The company’s GAAP net loss narrowed to $363 million, or $0.57 per share, from $940 million, or $1.48 per share, in the year-ago period. On an adjusted basis, Delta reported EPS of $0.25 compared to a loss of $1.23 per share last year. Adjusted EPS fell short of projections of $0.30.

Trends

Delta continued to see strength in unit revenue during the first quarter. Total revenue per available seat mile (TRASM) increased 15% on a reported basis and 23% on an adjusted basis compared to the year-ago quarter. Passenger revenue per available seat mile (PRASM) increased 27% YoY in Q1. Capacity was up 18% in the first quarter while passenger load factor was 81% versus 75% last year.

Passenger revenue increased 51% YoY to $10.4 billion in Q1. Delta saw a pick-up in business travel, which was led by small and medium-sized business demand as well as growth in international business travel. Small and medium business bookings in the first quarter were fully recovered compared to 2019 levels.

International corporate sales in Q1 were around 90% recovered to 2019 levels while domestic corporate sales were around 85% recovered to 2019 levels. In its earnings report, Delta said that based on recent corporate survey results, 96% of companies expect their travel to increase or stay the same sequentially in the second quarter of 2023.

In Q1, operating expenses increased 29% YoY to $13 billion. Non-fuel unit cost (CASM-ex) increased 4.7%. Reported average fuel price per gallon was $3.01, up 8% from the year-ago period.

Outlook

For the second quarter of 2023, total revenue is expected to increase 15-17% year-over-year. Adjusted EPS is estimated to be $2.00-2.25 while operating margin is expected to be 14-16%. For the full year of 2023, total revenue is expected to grow 15-20% YoY while operating margin is estimated to be 10-12%. Adjusted EPS is expected to be $5-6 for the year.

Most Popular

What to look for when CVS Health (CVS) reports Q3 earnings

Healthcare company CVS Health Corporation (NYSE: CVS) is all set to report earnings next week, with Wall Street expecting a mixed outcome. The company has been facing challenges in certain

eBay (EBAY): A few factors that helped drive growth in Q3 2024

Shares of eBay Inc. (NASDAQ: EBAY) stayed green on Friday. The stock has gained 32% year-to-date. The ecommerce leader delivered revenue and earnings growth for the third quarter of 2024,

CVX Earnings: Chevron reports lower revenue and profit for Q3 2024

Energy exploration company Chevron Corporation (NYSE: CVX) on Friday announced third-quarter 2024 financial results, reporting a decline in net profit and revenues. Net income attributable to Chevron Corporation dropped to

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top