Global Courant
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Delta Airlines on Tuesday, it raised its second-quarter forecast and estimated full-year adjusted earnings of $6 per share, at the high end of estimates it gave last April as strong travel demand and trade-ins to more expensive fare classes continue to drive growth stimulate.
Delta forecast adjusted earnings per share of $2.25 to $2.50 for the second quarter, up from an earlier range of $2 to $2.25 per share. CEO Ed Bastian said the company’s second-quarter earnings, scheduled to be released next month, could be the highest ever for the April-June period.
“The question as you know, as anyone who travels knows, is off the chain,” Bastian said in an interview with CNBC’s “Squawk Box.”
During an Investor Day presentation on Tuesday, the airline also raised its estimate for generating free money this year from $2 billion to $3 billion. Delta reinstated its quarterly dividend earlier this month.
Delta and its rivals are reporting strong travel demand, particularly for international travel, while other industries are struggling as consumers grapple with inflation and other challenges. The airline industry has also faced growth constraints due to a shortage of air traffic controllers, delays in new aircraft and a shortage of new pilots, which has kept rates stable.
But in addition to the resilient demand, airlines are also benefiting from jet fuel prices that are about 30% lower than a year ago.
And Delta on Tuesday forecast revenue per available seat mile, a measure of how much money an airline generates for how much it flies, to be as much as 18% higher than last year, up from a previous forecast of 15% to 17% growth.
The airline has repeatedly touted customers’ willingness to buy more expensive seats, from extra-legroom seats to first class. Premium sales this year will be approximately $19 billion, a 35% share of total sales, up from a 24% share in 2014.
The carrier also said its lucrative partnership with American Express credit cards continues to grow, bringing in an estimated $6.5 billion this year, compared to $4 billion in 2019.
Delta shares rose more than 3% during morning trading on Tuesday.
