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Delta (DAL) Expects Passenger Revenues to Aid Its Q2 Earnings
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Delta Air Lines’ (DAL - Free Report) passenger revenues account for bulk of its top line, like most other airlines,. Driven by the buoyant air-travel demand scenario, passenger revenues are likely to have moved north. This, in turn, is expected to boost Delta’s performance, when it reports second-quarter 2023 results on Jul 13.
Passenger Revenues in Q1: A Flashback
Air-travel demand was strong in the first quarter of 2023. Riding on the rosy scenario, passenger revenues, accounting for 81.6% of total revenues, increased 51% year over year to $10,411 million at DAL.
Domestic markets contributed 72.9% to total passenger revenues. Domestic passenger revenues in the March quarter increased 37% year over year. Passenger revenues also improved on the international front at DAL. The stock currently carries a Zacks Rank #2 (Buy).
Passenger Revenues: A Tailwind for Q2 as Well
We expect upbeat air-travel demand, particularly on the domestic front, to have boosted Delta Air Lines’ top-line performance in the to-be-reported quarter. Our estimate indicates a 5.6% increase from the second-quarter 2022 actuals.
Driven by the uptick, DAL’s management expects operating margin for the second quarter to be 16%. Load factor (percentage of seats filled by passengers) is also likely to have been impressive in the June quarter. The Zacks Consensus Estimate for load factor is pegged at 86%, higher than 85% reported in second-quarter 2022.
Backed by strong passenger revenues, management now estimates adjusted earnings per share to be between $2.25 and $2.50 for the quarter under review. The earlier projection was in the range of $2-$2.25. The Zacks Consensus Estimate is currently pegged at $2.42.
Overall Top & Bottom-Line Projections
Mainly owing to buoyant passenger revenues, the consensus mark for quarterly sales is presently pegged at $15.01 billion, implying an 8.57% increase from second-quarter 2022 reported figure. The Zacks Consensus Estimate for earnings currently hints at an increase of 68.06% from second-quarter 2022 levels.
Our Take
High passenger revenues coupled with low fuel costs (oil price declined 6.6% in the Apr-Jun period) are likely to aid Delta’s results when it kicks off the second-quarter earnings season for airlines.
United Airlines has outpaced the Zacks Consensus Estimate for earnings in three of the last four quarters (missing the consensus mark in the remaining quarter). The average beat is 9.14%. The Zacks Consensus Estimate for second-quarter 2023 earnings has increased 7.96% over the past 60 days.
American Airlines has outpaced the Zacks Consensus Estimate for earnings in three of the last four quarters (missing the consensus mark in the remaining quarter). The average beat is 6.19%. The Zacks Consensus Estimate for second-quarter 2023 earnings has increased 24.03% over the past 60 days.
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Delta (DAL) Expects Passenger Revenues to Aid Its Q2 Earnings
Delta Air Lines’ (DAL - Free Report) passenger revenues account for bulk of its top line, like most other airlines,. Driven by the buoyant air-travel demand scenario, passenger revenues are likely to have moved north. This, in turn, is expected to boost Delta’s performance, when it reports second-quarter 2023 results on Jul 13.
Passenger Revenues in Q1: A Flashback
Air-travel demand was strong in the first quarter of 2023. Riding on the rosy scenario, passenger revenues, accounting for 81.6% of total revenues, increased 51% year over year to $10,411 million at DAL.
Domestic markets contributed 72.9% to total passenger revenues. Domestic passenger revenues in the March quarter increased 37% year over year. Passenger revenues also improved on the international front at DAL. The stock currently carries a Zacks Rank #2 (Buy).
Passenger Revenues: A Tailwind for Q2 as Well
We expect upbeat air-travel demand, particularly on the domestic front, to have boosted Delta Air Lines’ top-line performance in the to-be-reported quarter. Our estimate indicates a 5.6% increase from the second-quarter 2022 actuals.
Driven by the uptick, DAL’s management expects operating margin for the second quarter to be 16%. Load factor (percentage of seats filled by passengers) is also likely to have been impressive in the June quarter. The Zacks Consensus Estimate for load factor is pegged at 86%, higher than 85% reported in second-quarter 2022.
Backed by strong passenger revenues, management now estimates adjusted earnings per share to be between $2.25 and $2.50 for the quarter under review. The earlier projection was in the range of $2-$2.25. The Zacks Consensus Estimate is currently pegged at $2.42.
Overall Top & Bottom-Line Projections
Mainly owing to buoyant passenger revenues, the consensus mark for quarterly sales is presently pegged at $15.01 billion, implying an 8.57% increase from second-quarter 2022 reported figure. The Zacks Consensus Estimate for earnings currently hints at an increase of 68.06% from second-quarter 2022 levels.
Our Take
High passenger revenues coupled with low fuel costs (oil price declined 6.6% in the Apr-Jun period) are likely to aid Delta’s results when it kicks off the second-quarter earnings season for airlines.
Apart from Delta, we expect the above tailwinds to have aided performances of fellow airline players like United Airlines (UAL - Free Report) and American Airlines (AAL - Free Report) . While United Airlines is scheduled to report second-quarter 2023 results on Jul 19, American Airlines will release the same on Jul 20. Each stock is currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
United Airlines has outpaced the Zacks Consensus Estimate for earnings in three of the last four quarters (missing the consensus mark in the remaining quarter). The average beat is 9.14%. The Zacks Consensus Estimate for second-quarter 2023 earnings has increased 7.96% over the past 60 days.
American Airlines has outpaced the Zacks Consensus Estimate for earnings in three of the last four quarters (missing the consensus mark in the remaining quarter). The average beat is 6.19%. The Zacks Consensus Estimate for second-quarter 2023 earnings has increased 24.03% over the past 60 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.