Delta beats Q1 earnings expectations, CEO sees ‘quite healthy’ travel demand this spring and summer

Delta beats Q1 earnings expectations, CEO sees ‘quite healthy’ travel demand this spring and summer

Delta Air Lines’ (DAL) first quarter results flew over expectations as travel remained resilient and a resurgence in corporate travel occurred.

Here’s how Delta performed versus consensus estimates compiled by Bloomberg:

  • Adjusted net income: $288 million vs. $235 million expected

  • Adjusted earnings per share: $0.45 vs. $0.36 expected

  • Revenue: $12.6 billion vs. $12.5 billion expected

“We have seen some real strong demand,” Delta Air Lines CEO Ed Bastian told Yahoo Finance. “That momentum has continued internationally. It’s continued domestically. … Year to date, we’ve seen the 11 highest sales days in our company’s history. That’s a strong predictor that the spring and summer season is going to be quite healthy on the travel side.”

Delta stock moved slightly higher by around 5% in premarket trading. Year to date, shares of the Atlanta-based airline operator are up 17.6%.

TSA passenger throughput in 2024 has been pacing ahead of last year’s travel figures, and that’s after air travel fully bounced back above pre-pandemic levels in 2023.

“We continue to see the strength of the transatlantic demand for the spring and summer continue, which is great,” Bastian said. “We’re flying even higher level of capacity this summer than last, and we expect our overall pricing levels are going to remain largely the same.”

Bastian also pointed to corporate travel as a major contributor to margins during the quarter.

“We also see business travel picking up again,” he said. “That’s the reason we were able to generate the profit in the first quarter. … I think that higher level of business demand is very healthy in terms of filling in short-term travel gaps that we might have in the schedule.”

Delta Air Lines is the first airline to report first quarter earnings for 2024. With its booking trends and operational differentiation, Bastian believes Delta will be the “only profitable major airline during the quarter.”

The operator reiterated its outlook for full-year earnings per share of $6 to $7 and free cash flow of $3 billion to $4 billion.

Delta Airlines passenger jets are pictured outside the newly completed 1.3 million-square foot $4 billion Delta Airlines Terminal C at LaGuardia Airport in the Queens borough of New York City, New York, U.S., June 1, 2022. REUTERS/Mike Segar (REUTERS / Reuters)

Delta also provided some updates on its premium-tier push, including co-branded credit card benefits, aircraft technology, and luxury lounge launches.

Investing in its premium offerings won’t let up anytime soon as the company aims to soothe SkyMiles rewards members who were rattled by program adjustments during 2023. Top brass at Delta are now earmarking an annual spend of $5 billion toward improving the travel experience.

Boeing aircraft deliveries delayed

While airlines remain focused on keeping up with strong travel demand, the latest spate of Boeing (BA) aircraft issues has forced industry executives to adjust some of their long-term business plans.

In the early weeks of the year, a fuselage panel dislodged from an Alaska Airlines-operated Boeing 737 Max 9 airplane during flight. The aftermath included an FAA investigation and increased oversight, a production pause for new Max aircraft, a companywide quality assurance day, the firing of the Max program CEO, and eventually, the departure of Boeing CEO Dave Calhoun.

FILE - A door plug area of an Alaska Airlines Boeing 737 Max 9, with paneling removed, is shown prior to inspection at Seattle-Tacoma International Airport, Jan. 10, 2024, in SeaTac, Wash. Air safety in general and concerns about Boeing-made planes in particular have been on the minds of many since January, when a panel covering an emergency door hole blew off an Alaska Airlines plane flying 16,000 feet above Oregon. (AP Photo/Lindsey Wasson, File)

A door plug area of an Alaska Airlines Boeing 737 Max 9, with paneling removed, is shown prior to inspection at Seattle-Tacoma International Airport, Jan. 10, 2024, in SeaTac, Washington. (AP Photo/Lindsey Wasson, File) (ASSOCIATED PRESS)

While Delta’s fleet includes some Boeing planes, it does not currently operate any of Boeing’s Max aircraft. However, the carrier revised its expectation to take delivery on its order for 100 737 Max 10 aircraft to 2027 from 2025.

“We’re not expecting to see the Max 10 for at least two to three years, and I don’t think anyone can tell you exactly when it’s going to arrive,” Bastian said on the delay, adding: “I still have confidence in the company.”

“I think we all know it’s going to take some time before they get the overall level of quality and production where it needs to be,” Bastian continued. “And the board there decided to make a change in the leadership. I have a lot of confidence in Steve Mollenkopf, who’s the new chair.”

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