Categories Analysis, Industrials

Delta Air Lines is all set to report Q1 earnings. Here’s what to expect

When the report comes on April 10, at 6:30 am ET, the market will be looking for an increase in revenue and profit

Delta Air Lines (NYSE: DAL) will be reporting first-quarter earnings next week amid expectations for strong top line and earnings growth. The post-COVID upswing in global air travel demand has continued this year, thanks to the shift in consumer spending from goods to services, and the trend bodes well for Delta.

Buy DAL?

Delta’s shares have gained about 53% since slipping to a one-year low in October last year. But the stock is yet to fully recover from the pandemic-induced plunge a few years ago. Meanwhile, it has been on a steady upswing since the beginning of 2024. The low valuation and strong rowth prospects make DAL a compelling investment that long-term investors wouldn’t want to miss.

The airline will be publishing first-quarter earnings on the morning of April 10, before the opening bell. On average, analysts following the company call for earnings per share of $0.35 for the March quarter, which is slightly below the management’s guidance and above the $0.25 it earned in the first quarter of 2023. The optimistic forecast reflects an estimated 5.8% annual growth in revenues to $12.53 billion. Delta executives are looking for a 3-6% top-line growth.

Road Ahead

The demand for air travel has remained strong so far this year, aided by the rebound in travel spending after the pandemic-induced downturn. Delta has delivered stable operating margins despite cost pressures related to supply chain constraints and workforce reduction. The uptick in higher-margin premium cabin sales and the loyalty program linked to the company’s tie-up with American Express should translate into sales and earnings growth going forward.

From Delta Air Lines’ Q4 2023 earnings call:

“On the ground, we are building the airports of the future in some of the most important markets and adding new Delta Sky Clubs to provide our customers with a world-class airport experience. We completed our transformation at Los Angeles 18 months ahead of schedule, including a state-of-the-art facility and a new Delta Sky Club that was named North America’s Best Airline Lounge for 2023 by Business Traveler. We opened the latest phase of our Salt Lake City expansion, and we’ll complete the generational rebuild of LaGuardia this year.”

Past Performance

Delta’s adjusted earnings and revenues topped expectations in the past three quarters, even as the bottom line improved steadily after emerging from the negative territory post-pandemic. However, earnings declined 14% year-over-year to $1.28 per share in the December quarter, despite a 6% increase in revenues to $14.2 billion. A double-digit growth in Q4 passenger revenue more than offset weakness in the other segments.

DAL’s value has stayed above its 12-month average in recent weeks. The momentum waned slightly on Monday and the stock traded down 2% in the afternoon.

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