Global Courant 2023-04-13 20:19:14
Delta Air Lines aircraft at the Hartsfield-Jackson Atlanta International Airport (ATL) in Atlanta, Georgia, on Tuesday, December 21, 2021.
Elijah Nouvelage | Bloomberg | Getty Images
ATLANTA— Delta Airlines recorded a larger loss than before estimated for the first three months of the year, but forecast revenue growth and earnings for the second quarter to be higher than analyst estimates, pointing to strong travel demand despite weakness in other sectors.
CEO Ed Bastian on Thursday brushed off the potential of a consumer spending pullback.
Air travel “is something that consumers prioritize,” Bastian said in an interview. “They may be backing off in other areas … but I don’t see it in our credit card information, I don’t see it in our bookings.”
The Atlanta-based carrier said it expects sales to grow 15% to 17% in the current quarter over last year, with adjusted operating margins as high as 16% and adjusted earnings per share between $2 and $ 2.25. Analysts polled by Refinitiv had expected second-quarter revenue growth of 14.7% and earnings per share of $1.66.
The airline predicted “record advance bookings for the summer”.
Bastian said the carrier is rolling back its summer capacity growth plans in an effort to improve reliability. Airlines have faced delays in aircraft delivery, backlogs in staffing and training, and restricted airspace.
Delta said it plans to increase capacity by 17% in the second quarter from a year earlier, though that won’t return the airline to 2019 levels as previously planned.
“We are deliberately withdrawing some capacity,” Bastian told CNBC. “We want to make sure we don’t exceed our capabilities.”
He said the airline should be able to reach 2019 capacity levels by the end of the year.
US airlines generally generate most of their revenue during the busy spring and summer travel season and Delta’s outlook points to stronger travel demand and strong pricing power. Delta is the first US airline to report quarterly earnings this season. United Airlines will announce Tuesday and other carriers will report later in the month.
Here’s how Delta performed in the first quarter, ended on March 31compared to Wall Street expectations based on Refinitiv consensus estimates:
Adjusted earnings per share: 25 cents versus 30 cents expected. Adjusted revenue: $11.84 billion versus $11.99 billion expected.
Delta posted a net loss of $363 million, or 57 cents per share, referring in part to a new, four-year pilot contract that includes 34% increases. That’s still an improvement over the same period last year, when travel demand was still recovering and the company reported a net loss of $940 million, or $1.48 per share.
Adjusted for one-time items, the company reported net income of $163 million, or 25 cents per share, up from a loss of $748 million, or $1.23 per share, in the first quarter of 2022.
Unit costs, excluding fuel, were up 4.7% year-over-year, partly due to winter storms grounding flights.
Delta said its corporate bookings are recovering, with domestic sales in March returning 85% to 2019 levels. It also received a boost in its loyalty program, with its co-branded credit card partnership with American Express Delta contributed $1.7 billion in the last quarter, an increase of 38% over last year.
The airline said sales of first-class cabins, such as first-class, exceeded revenues from standard coaches.
