What to expect when Delta Air Lines (DAL) reports its Q4 earnings this week

Shares of Delta Air Lines Inc. (NYSE: DAL) were up 1% on Wednesday. The stock has gained 17% year-to-date and 31% over the past three months. The company is scheduled to report its fourth quarter 2022 earnings results on Friday, January 13 before the market opens. Here’s a look at what to expect from its upcoming report:

Revenue

Analysts are forecasting revenue of $12.2 billion for Delta in Q4 2022, which compares to $11.4 billion in Q4 2019. In the third quarter of 2022, Delta reported operating revenue of $13.9 billion on a GAAP basis, which was up 11% from Q3 2019. Adjusted operating revenue in Q3 was $12.8 billion, up 3% from the same period in 2019.

Delta continues to see robust demand for travel. With leisure travel remaining strong and business travel continuing to pick up, the airline remains optimistic about its growth trajectory. The company is likely to have benefited from strong travel trends during the holiday season. Last month, Delta raised its outlook for the fourth quarter of 2022. The company now expects total revenue to increase 7-8% from the fourth quarter of 2019 versus its prior range of 5-9% growth. For the full year of 2022, Delta expects total revenue to range between $45.5-45.6 billion.

Profits and margins

Analysts expect adjusted EPS of $1.32 for Q4 2022. This compares to adjusted EPS of $1.70 reported in Q4 2019. In Q3 2022, Delta delivered adjusted EPS of $1.51, which was down 35% from Q3 2019. The company raised its Q4 2022 adjusted EPS outlook to a range of $1.35-1.40 from the previous range of $1.00-1.25.

In Q3 2022, Delta’s operating margin was 10.4% on a GAAP basis and 11.6% on an adjusted basis. For the fourth quarter of 2022, the company raised its operating margin guidance to 11% from the prior range of 9-11%.

For the full year of 2022, Delta expects adjusted EPS to range between $3.07-3.12 and operating margin to be 7.7%.

Costs

In Q3 2022, Delta’s non-fuel unit cost (CASM-Ex) rose 22.5% to $12.43 compared to the same period in 2019. Average fuel price per gallon was $3.53, which was up 80% from Q3 2019. For the fourth quarter of 2022, adjusted fuel price per gallon is estimated to range between $3.35-3.55. Q4 unit cost is expected to be 12-13% higher than 2019.

Click here to read the full transcript of Delta Air Lines’ Q3 2022 earnings conference call