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Delta Air Lines (DAL - Free Report) reported first-quarter 2024 earnings (excluding 39 cents from non-recurring items) of 45 cents per share, which comfortably beat the Zacks Consensus Estimate of 36 cents. Earnings increased 80% on a year-over-year basis.
Revenues of $13.75 billion surpassed the Zacks Consensus Estimate of $12.84 billion and increased 7.75% on a year-over-year basis, driven by strong air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $12.56 billion, up 6% year over year.
The airline also gave a bullish view for the June quarter. The strong first-quarter earnings report and the bullish outlook pleased investors. As a result, the stock gained in early trading.
Delta Air Lines, Inc. Price, Consensus and EPS Surprise
Coming back to the first-quarter earnings report, passenger revenues, that accounted for 81% of total revenues, rose 7% year over year to $11.13 billion, just shy of our estimate of $11.17 billion. Domestic passenger revenues grew 5% year over year.
Passenger revenues improved on the international front. In fact, international passenger revenues increased 12% year over year, with transatlantic passenger unit revenues (PRASM) climbing 2%. Results were also aided by an uptick in travel spending by technology and financial services companies
Cargo revenues plunged 15% year over year to $178 million. The figure was higher than our estimate of $144 million. Other revenues increased 14% to $2.43 billion. The figure was well ahead of our estimate of $1.68 billion.
Delta expects second-quarter 2024 adjusted earnings in the $2.20-$2.50 per share band. Mid-point of the guided range (i.e. $2.35) is higher than the Zacks Consensus Estimate of $2.33. The adjusted operating margin in the June quarter is expected in the 14-15% range. Management projects second-quarter 2024 total revenues (adjusted) in the $15.3-$15.6 billion band, reflecting an increase of 5-7% from second-quarter 2023 actuals.
Other Aspects of Q1 Earnings Report
Adjusted operating margin was 5.1% compared with 4.6% a year ago.
Below, we present all figures (in percentage terms) in comparison with first-quarter 2023 results.
Revenue passenger miles (a measure of air traffic) increased 9% to 54.21 billion. Capacity (measured in available seat miles) expanded 7% to 65.54 billion. Load factor (percentage of seats filled by passengers) increased to 83% from 81%. The figure was also higher than our estimate of 82%.
Passenger revenues per available seat mile was flat at 17.98 cents. Passenger mile yield tumbled to 20.53 cents from 20.95 cents. On an adjusted basis, total revenues per available seat mile inched down 0.7% to 19.17 cents. The figure was a little higher than our estimate of 19.13 cents.
Total operating expenses, including special items, inched up 1% to $13.13 billion. Salaries and related costs hiked 12% to $3.79 billion. The increase was due to higher wages arising from the contract with pilots that was ratified in March 2023.
Fuel gallons consumed jumped 5% to $931 million. Average fuel price per gallon (adjusted) fell 10% to $2.76. Non-fuel unit cost (adjusted or CASM-Ex) inched up 1.5% to 14.08 cents.
DAL exited the first quarter of 2024 with cash and cash equivalents of $3.87 billion compared with $3.21 billion at the end of first-quarter 2023. The company had an adjusted net debt of $20.22 billion. Adjusted operating cash flow in the March quarter was $2.5 billion, with gross capital expenditures and free cash flow of $1.1 billion and $1.4 billion, respectively.
Remaining Aspects of Outlook
Available seat miles in the June quarter are envisioned to increase 6-7% from the year-ago actuals. Non-fuel unit cost in second-quarter 2024 is likely to increase 2%. Second-quarter 2024 fuel price per gallon is suggested in the $2.7-$2.9 range.
DAL, currently carrying a Zacks Rank #3 (Hold), still expects 2024 adjusted earnings in the range of $6-$7 per share. The Zacks Consensus Estimate is currently pegged at $6.53, higher than the mid-point ($6.50) of the guided range. For 2024, adjusted free cash flow is still expected in the $3-$4 billion range.
KEX has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 5.75%. Increased demand for distribution and services, and favorable marine transportation market conditions are bolstering revenues.
The Zacks Consensus Estimate for 2024 earnings has been revised 0.83% upward over the past 60 days. The company has an expected earnings growth rate of 32.80% for 2024. Shares of KEX have rallied 45.1% in the past year.
Air Lease is benefiting from continuous growth in its fleet and an increase in sales activity. The Zacks Consensus Estimate for AL’s 2024 earnings has improved 25.80% over the past 60 days. Shares of Air Lease have risen 26.1% in the past year.
AL has an expected earnings growth rate of 29.96% for 2024. The company delivered a trailing four-quarter earnings surprise of 20.15%, on average.
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Delta (DAL) Gains on Q1 Earnings & Revenues Beat, Rosy Q2 View
Delta Air Lines (DAL - Free Report) reported first-quarter 2024 earnings (excluding 39 cents from non-recurring items) of 45 cents per share, which comfortably beat the Zacks Consensus Estimate of 36 cents. Earnings increased 80% on a year-over-year basis.
Revenues of $13.75 billion surpassed the Zacks Consensus Estimate of $12.84 billion and increased 7.75% on a year-over-year basis, driven by strong air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $12.56 billion, up 6% year over year.
The airline also gave a bullish view for the June quarter. The strong first-quarter earnings report and the bullish outlook pleased investors. As a result, the stock gained in early trading.
Delta Air Lines, Inc. Price, Consensus and EPS Surprise
Delta Air Lines, Inc. price-consensus-eps-surprise-chart | Delta Air Lines, Inc. Quote
Coming back to the first-quarter earnings report, passenger revenues, that accounted for 81% of total revenues, rose 7% year over year to $11.13 billion, just shy of our estimate of $11.17 billion. Domestic passenger revenues grew 5% year over year.
Passenger revenues improved on the international front. In fact, international passenger revenues increased 12% year over year, with transatlantic passenger unit revenues (PRASM) climbing 2%. Results were also aided by an uptick in travel spending by technology and financial services companies
Cargo revenues plunged 15% year over year to $178 million. The figure was higher than our estimate of $144 million. Other revenues increased 14% to $2.43 billion. The figure was well ahead of our estimate of $1.68 billion.
Delta expects second-quarter 2024 adjusted earnings in the $2.20-$2.50 per share band. Mid-point of the guided range (i.e. $2.35) is higher than the Zacks Consensus Estimate of $2.33. The adjusted operating margin in the June quarter is expected in the 14-15% range. Management projects second-quarter 2024 total revenues (adjusted) in the $15.3-$15.6 billion band, reflecting an increase of 5-7% from second-quarter 2023 actuals.
Other Aspects of Q1 Earnings Report
Adjusted operating margin was 5.1% compared with 4.6% a year ago.
Below, we present all figures (in percentage terms) in comparison with first-quarter 2023 results.
Revenue passenger miles (a measure of air traffic) increased 9% to 54.21 billion. Capacity (measured in available seat miles) expanded 7% to 65.54 billion. Load factor (percentage of seats filled by passengers) increased to 83% from 81%. The figure was also higher than our estimate of 82%.
Passenger revenues per available seat mile was flat at 17.98 cents. Passenger mile yield tumbled to 20.53 cents from 20.95 cents. On an adjusted basis, total revenues per available seat mile inched down 0.7% to 19.17 cents. The figure was a little higher than our estimate of 19.13 cents.
Total operating expenses, including special items, inched up 1% to $13.13 billion. Salaries and related costs hiked 12% to $3.79 billion. The increase was due to higher wages arising from the contract with pilots that was ratified in March 2023.
Fuel gallons consumed jumped 5% to $931 million. Average fuel price per gallon (adjusted) fell 10% to $2.76. Non-fuel unit cost (adjusted or CASM-Ex) inched up 1.5% to 14.08 cents.
DAL exited the first quarter of 2024 with cash and cash equivalents of $3.87 billion compared with $3.21 billion at the end of first-quarter 2023. The company had an adjusted net debt of $20.22 billion. Adjusted operating cash flow in the March quarter was $2.5 billion, with gross capital expenditures and free cash flow of $1.1 billion and $1.4 billion, respectively.
Remaining Aspects of Outlook
Available seat miles in the June quarter are envisioned to increase 6-7% from the year-ago actuals. Non-fuel unit cost in second-quarter 2024 is likely to increase 2%. Second-quarter 2024 fuel price per gallon is suggested in the $2.7-$2.9 range.
DAL, currently carrying a Zacks Rank #3 (Hold), still expects 2024 adjusted earnings in the range of $6-$7 per share. The Zacks Consensus Estimate is currently pegged at $6.53, higher than the mid-point ($6.50) of the guided range. For 2024, adjusted free cash flow is still expected in the $3-$4 billion range.
Stocks to Consider
Investors interested in the broader Transportation sector may consider stocks like Kirby (KEX - Free Report) and Air Lease (AL - Free Report) . Each stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KEX has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 5.75%. Increased demand for distribution and services, and favorable marine transportation market conditions are bolstering revenues.
The Zacks Consensus Estimate for 2024 earnings has been revised 0.83% upward over the past 60 days. The company has an expected earnings growth rate of 32.80% for 2024. Shares of KEX have rallied 45.1% in the past year.
Air Lease is benefiting from continuous growth in its fleet and an increase in sales activity. The Zacks Consensus Estimate for AL’s 2024 earnings has improved 25.80% over the past 60 days. Shares of Air Lease have risen 26.1% in the past year.
AL has an expected earnings growth rate of 29.96% for 2024. The company delivered a trailing four-quarter earnings surprise of 20.15%, on average.