Buy DAL?
The fast-paced market reopening, improving COVID scenario in China and post-pandemic rebound in business travel bode well for the aviation industry. However, the companies will have to use a significant portion of their cash flows for repaying loans, since most airlines including Delta have accumulated huge debts in recent years. Rising interest rates and high fuel costs add to the problem.
Q1 Report On Tap
It is estimated that Delta earned $0.32 per share in the first quarter of 2023 — a significant improvement from the prior-year period when the company suffered a loss of $1.23 per share. The rebound represents an estimated 48% growth in revenues to $12.05 billion. The company is scheduled to publish the results on April 13, before markets open.
From Delta’s Q4 2022 earnings conference call:
“We have invested in the customer experience at every stage of the travel journey, from the continued refresh of our fleet with next-generation far more fuel-efficient aircraft to generational airport rebuilds and technology investments that are providing our employees better tools and our customers a more seamless experience. And we continue to attract and partner with leading brands to grow our SkyMiles ecosystem and further enable customers to use their SkyMiles during travel and beyond. Heading into 2023, our momentum continues.”
Key Numbers
The company ended a pandemic-induced losing streak more than a year ago and has constantly enhanced revenues and profitability since then. In the fourth quarter, earnings topped expectations after three consecutive misses but declined in double-digits to $1.48 per share. Meanwhile, passenger revenues grew 6% annually, driving up total operating revenues by 17% to $13.4 billion. The top line also benefited from strong growth in the non-core operating segments.
After opening Tuesday’s session at $34.48, Delta’s stock slipped in the early hours and traded close to its 52-week average. In the past 30 days, it has decreased by about 13%.