Delta Airlines was the first airline to report second quarter earnings on Thursday announcing record revenue and profit from the resurgence of travel and lower jet fuel expenses. Airport passenger volumes hit a new high on June 30, a day Delta said was its highest summer revenue day ever. DAL raised guidance with expected higher demand putting the airline on track to earn $2.20 to $2.50 a share, above what analysts are expecting. The company raised its guidance for the full year to $6 to $7 a share.
This was first full summer season without pandemic-era travel restrictions for many countries which has boosted international trips. Delta said its revenue from international flying was 61% higher than a year earlier.
Delta Airlines Earnings
Q2 2023 earnings released at 6:15 a.m. ET; conference call at 10:00 a.m ET
- Adjusted net income: $1.72 billion profit, or $2.68 per share, new high and above the guidance it rose just over two weeks ago.
- Revenue: $15.6 billion, also a record.
- Airport passenger volumes hit a new high on June 30, a day Delta said was its highest summer revenue day ever.
- International passenger revenue jumped by 61% yr/yr to a June quarterly record of $4.2 bln.
- Transatlantic revenue, which increased by 65%, was driven by strong U.S. consumer demand, Transpacific revenue growth of 175% bolstered by the reopening of Japan and performance of DAL’s joint venture with Korean Air.
- Domestic corporate travel grew on a yr/yr basis as travel budgets loosen up.
- DAL noted in that a recent corporate survey indicates that 93% of companies expect their travel spending to increase or stay the same in Q3.
- After increasing by 2.4% in Q2, DAL is forecasting non-fuel CASM to decrease by 1-3% in Q3.
DAL: Stock Market Reaction
- 46.49 ▼ -1.12 (-2.35%) Friday
- 46.49 ▲ +16.4 (+54.5%) past year
- 46.49 ▼ -5.5 (-10.58%) past 5 years
- 52wk High $49.81
- 52wk Low $27.20
Premium travel is the number one priority for the consumers that we target. They’re not interested in buying houses or cars or boats or electronics, but they are interested in traveling.” CEO Ed Bastian said in an earnings release.
International travel, largely sidelined in 2020 and 2021, was a bright spot in the second quarter. Unit revenue growth outpacing domestic for the first time since the pandemic started back in Q322 has risen since, Delta said. Italy, Spain and Greece were popular destinations.
Outlook
Delta expects demand to remain on pace in the current quarter, putting the airline on track to earn $2.20 to $2.50 a share, above what analysts are expecting. The company raised its guidance for the full year to $6 to $7 a share.
Consumers are continuing to book travel abroad into September and October, Bastian said, extending the travel season longer than usual. Hybrid work arrangements are helping drive that, airline executives have said.
“The trends you’re seeing, post-Labor Day we’re seeing the same thing,” Bastian said. Longer term, the airline industry is on track for a multiyear recovery, adding “we’re looking at a very, very strong Q3.”
Delta is upgrading its fleet domestically and internationally. During the third quarter last year, Delta entered a purchase agreement with Boeing to add one hundred 737-10 aircraft to its fleet, with delivery set to begin in 2025. Non-fuel costs have reached an inflection point with the rebuild mostly behind the company, according to CFO Dan Janki. After increasing by 2.4% in Q2, DAL is forecasting non-fuel CASM to decrease by 1-3% in Q3.
DAL’s competitors are next up; United Airlines (UAL) scheduled to report earnings on July 19, followed by American Airlines (AAL) on July 20 and Southwest Airlines (LUV) on July 27. American Airlines has been planning another big trans-Atlantic expansion, betting international travel will continue to rebound.
Source: Delta, IATA, TradersCommunity
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