Delta Air Lines (NYSE:DAL) reported first-quarter earnings that surpassed Wall Street expectations, buoyed by strong demand and operational performance. The company's shares climbed 4.56% as it also projected record revenue for the upcoming June quarter.
For the first quarter, Delta posted adjusted earnings per share (EPS) of $0.45, exceeding the analyst consensus of $0.34. The company's revenue reached $12.6 billion, outpacing the expected $12.46 billion and marking a 6% increase from the same quarter last year. This top-line growth is attributed to Delta's leading operational reliability and strong demand trends, which have contributed to a record March quarter completion factor.
Delta's CEO, Ed Bastian, attributed the successful quarter to the "extraordinary work of our 100,000 people," noting the company's operational reliability and the $1.4 billion in profit-sharing payouts made during the quarter. President Glen Hauenstein highlighted the 6% revenue increase over the prior year, with adjusted total unit revenue down only 0.7%, including headwinds from cargo and maintenance, repair, and overhaul services.
Looking ahead, Delta foresees continued momentum and expects the June quarter to deliver record revenue with a mid-teens operating margin. The company anticipates an EPS of $2.20 to $2.50, with the midpoint of $2.35 surpassing the analyst consensus of $2.25. For the full year 2024, Delta reaffirms its EPS outlook of $6.00 to $7.00, against a consensus of $6.46, and anticipates free cash flow between $3 to $4 billion.
The airline's cost performance also showed improvement, with CFO Dan Janki noting a pre-tax income of $380 million, up $163 million from last year. Operational excellence contributed to the best March quarter completion factor in Delta's history, providing additional capacity growth and unit cost favorability.
Investors' confidence seems bolstered by Delta's robust financial health and optimistic revenue projections. The company's diversified revenue streams, including loyalty programs, premium offerings, cargo, and MRO, accounted for 57% of total revenues, with premium revenue growing 10% over the March quarter of 2023.
Delta's operational and financial metrics indicate a strong recovery trajectory, with the airline capitalizing on returning corporate travel and robust demand in both domestic and international markets. As travel continues to rebound, Delta's strategic investments and operational efficiency are poised to drive further growth and shareholder value.
Following the report, analysts at Citi noted Delta's strong Q1 print and positive guidance, saying that overall, the results "looked very encouraging."
"Overall, these results should support Buy-rated Delta Air Lines’ shares on Wednesday morning," said Citi, which continues to identify Delta as its preferred US carrier. The firm maintained a $55 price target on the stock.