Delta earnings miss, airline stocks rebound as Delta doubles down on its recession defense | Business Investor Daily

Delta Airlines (DAL) reported a sharp rise in earnings for the first quarter early Thursday. Airline stocks rebounded after a warning from… American Airlines (AAL) raised demand concerns on Wednesday. Shares of DAL, American Airlines, and others rose early Thursday.

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Delta’s earnings report kicks off quarterly results for the airline and the travel industry in general.

Delta CEO Ed Bastian said recession fears are not fading away Reuters on Wednesday that the carrier will double down on more lucrative premium travel to defend against the economic downturn.

The airline plans to offer 15,000 more additional seats per day across its network this year versus pre-pandemic. She declined to share more details.

Delta earnings

Estimates: Analysts polled by FactSet expected Delta to swing to earnings of 29 cents per share, versus a loss of $1.23 a year ago.

Revenue was seen jumping nearly 36% to $12.675 billion. But this would mark the seventh consecutive quarter of slowing sales growth.

results: Delta reported adjusted earnings per share of 25 cents. Adjusted operating income came in at $11.842 billion.

prospectsFor the full year 2023, Delta management has projected earnings of $5 to $6 per share. That put the midpoint above Wall Street’s forecast for earnings of $5.36 per share, up nearly 68% from 2022. Going back to Thursday’s report, the analyst consensus expects revenue to increase 10% for the full year, as well as free cash flow of $2.016 billion. .

In January, Delta directed 2023 EPS in the $5 to $6 range, with the midpoint at $5.50. It also increased revenue by 15%-20% and free cash flow of more than $2 billion.

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Shares of Delta Air Lines rose 3.3% in a pre-market move Thursday. They fell 2.4 percent to 33.74 in stock market trading on Wednesday. DAL stock closed just below the 200-day moving average. It is well below the 50-day average decline.

American Airlines shares fell 9.2% and United Airlines shares fell 6.5% on Wednesday. AAL stock jumped 2% and UAL stock rose 3.5% early Thursday.

AAL stock fell sharply below its 200-day line on Wednesday.

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Airline stocks raise earnings expectations, but not enough

American Airlines raised its earnings forecast for the first quarter on Wednesday, but it was still below consensus views.

The company now expects earnings per share between 1 and 5 cents for the quarter, up from previous guidance for steady earnings versus the same quarter last year. The 3p midpoint for guidance was lower than the 5c forecast of analysts polled by FactSet. FactSet subsequently lowered its consensus number to 4 cents.

American also said it expects a 25.5% increase in its total revenue per available seat mile, in line with previous guidance.

In mid-March, as earnings season approached, United Airlines reported first-quarter earnings, raising concerns about demand.

The profit warning surprised the market. And while companies in other sectors warned of recessionary risks, airlines should have expected strong demand at the time. Commercial air travel is recovering after the Covid-19 pandemic.

In contrast to United, in mid-March Delta Air Lines maintained its outlook for the first quarter. She said the demand for travel is strong and getting stronger.

On April 6, United Airlines said it expanded its flights by 25% compared to a year ago, citing a “sharp increase” in demand for travel outside the United States.

The carrier reported Q1 late on April 18th.

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