Delta Air Lines projected record third-quarter revenue driven by strong summer travel demand but fell short of analysts’ expectations. Delta anticipates a sales increase of up to 4%, below the 5.8% growth estimated by LSEG analysts, and forecasted adjusted earnings per share of $1.70 to $2, as opposed to the expected $2.05. As a result, Delta’s shares dropped about 6% in mid-morning trading, affecting other major U.S. airlines as well.
Kicking off airline earnings season, Delta reported a second-quarter adjusted revenue of $15.4 billion, a 5.4% year-over-year increase but still shy of Wall Street predictions. Net income fell nearly 30% to $1.31 billion, primarily due to a 10% rise in operating expenses. Despite lower fare discounts impacting the domestic market, Delta’s performance met analysts’ EPS expectations at $2.36. June airfares saw a 5.1% year-over-year decline.
CEO Ed Bastian noted that lower industry capacity towards summer’s end should better match demand. Delta expects a 5-6% increase in flying capacity for Q3, slower than Q2’s 8%. International travel remains robust, though heightened competition has emerged due to expanded schedules. Trans-Atlantic unit revenue is projected to dip by 1 percentage point due to the Summer Olympics in Paris, impacting revenue by approximately $100 million.
Delta saw a 10% growth in premium ticket revenue, reaching $5.6 billion, while revenue from coach tickets rose marginally by 0.3%. Its American Express credit card deal brought in $1.9 billion, up 9% from last year. The company is relatively insulated from industry overcapacity due to its focus on premium seats and diversified revenue streams. Delta reiterated its full-year earnings projection of $6 to $7 per share, with expected free cash flow of up to $4 billion.
NBCUniversal, the parent company of CNBC, holds U.S. broadcast rights to the Olympics through 2032.
Original Story https://www.cnbc.com/2024/07/11/delta-air-lines-dal-earnings-q2-2024.html
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