DAL - Delta Air Lines CEO takes a positive tone despite trimming earnings outlook

2023-10-12 10:04:06 ET

Delta Air Lines Inc (NYSE: DAL) opened 2.0% up on Thursday after reporting solid results for its fiscal third quarter.

Delta Air Lines says demand is keeping strong

Investors are cheering also because the legacy carrier said that demand was keeping strong in the current quarter as well.

In fact, its revenue in September printed at an all-time high – which was a sufficient boost to confidence for the management to raise its sales guidance for the full year.

Delta Air Lines is now calling for about a 20% annualised growth in sales in its fiscal 2023 versus 17% to 20% it had guided for earlier. According to Ed Bastian – its Chief Executive:

Our consumer is more on premium end. Our consumers are healthy – continuing to prioritise travel. It’s not just travel, it’s hospitality, entertainment, and everything. I see that trend continuing.

Delta Air Lines narrows full-year EPS guidance

On the downside, though, Delta Air Lines now expects its per-share earnings to be capped at $6.25 in 2023. It had previously seen that metric hitting up to $7.0.

Expected weakness on that front is related to the rising oil prices . Still, speaking with CNBC today, the Chief Executive said:

We started the year expecting EPS to be between $5.0 and $6.0. So, we’re at the top end of that guidance. We know we have to recalibrate. Fuel prices have to find their way into pricing.

Delta Air Lines saw its domestic revenue jump 6.0% year-on-year in the third quarter while its international revenue climbed a whopping 35%. Still, shares of the airline are currently trading below their 200-day MA.

Notable figures in Delta Air Lines Q3 earnings

• Earned $1.11 billion versus the year-ago $695 million
• Per-share earnings also climbed from $1.08 to $1.72
• Adjusted EPS printed at $2.03 as per the press release
• Adjusted revenue increased 13% YoY to $14.55 billion
• Consensus was $1.95 a share on $14.56 billion revenue

Other notable figures in the earnings report include a 17% increase in traffic and 16% increase in capacity. Load factor at 88% was up 1.0% versus last year and more than 1.0% versus the Street estimates.

CEO Bastian also confirmed on Thursday that the Israel-Palestine war, so far, was not weighing on demand for international travel.

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