Key Takeaways
- Delta delivered Q1 adjusted EPS of 64 cents per share, surpassing the 58-cent forecast; revenue reached $14.2 billion, exceeding projections.
- DAL shares soared approximately 13% during premarket hours, while competitors United, American, and Southwest gained 9–11%.
- The carrier projects Q2 adjusted EPS between $1.00 and $1.50, placing the midpoint of $1.25 under the analyst consensus of $1.41.
- Jet fuel expenses are projected to increase by over $2 billion during Q2, with prices nearly doubling since late February amid Iran-related tensions.
- The airline eliminated planned capacity expansion for Q2 and increased checked-bag fees to counterbalance escalating expenses.
Delta Air Lines delivered first-quarter results that exceeded Wall Street forecasts, propelling its shares significantly higher during Wednesday’s premarket session. The announcement coincided with news of a two-week U.S.-Iran ceasefire, providing additional momentum across the airline sector.
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Adjusted earnings reached 64 cents per share, outpacing the 57–58 cent consensus forecast. Revenue totaling $14.2 billion similarly surpassed projections. Competing carriers United, American, and Southwest experienced premarket gains ranging from 9% to 11% following the announcement.
Looking ahead to Q2, the carrier adopted a more conservative stance. Delta provided adjusted EPS guidance of $1.00 to $1.50, positioning the $1.25 midpoint beneath the $1.41 analyst average. The company chose to withhold updates to its full-year forecast, pointing to ongoing fuel price volatility.
Jet fuel prices have approximately doubled since late February, primarily driven by conflict involving Iran. Delta anticipates paying roughly $4.30 per gallon during Q2, adding upward of $2 billion to its fuel expenditures compared to the corresponding period last year.
To mitigate the impact, Delta is deploying several strategies. The company’s proprietary oil refinery is projected to generate a $300 million benefit during Q2, up substantially from approximately $60 million in Q1 as refining margins expanded. CEO Ed Bastian indicated the carrier targets recovering 40–50% of elevated fuel costs through ticket price adjustments in the quarter.
Delta announced increased checked-bag fees on Tuesday, mirroring recent actions by United and JetBlue. Bastian left open the possibility of making the increases permanent. “At this level of fuel, it’s hard to call anything temporary,” he noted.
Capacity Adjustments Underway
Delta eliminated all previously planned capacity expansion from the June quarter, representing a reduction of approximately 3.5 percentage points from its initial projections. The airline added that future capacity growth plans now carry a “downward bias until the fuel environment improves.”
U.S. carriers collectively have trimmed planned domestic capacity growth by more than half a percentage point since March 13. Delta’s refinery operations and robust demand profile position it more favorably than competitors to weather the current pressure.
Bastian reported that ticket sales increased at a double-digit rate year-over-year throughout the past month, with strength carrying forward into Q2. Affluent travelers particularly have demonstrated sustained spending patterns.
Wall Street Forecasts Show Wide Divergence
Full-year EPS projections among analysts span from merely 15 cents to $7.50, illustrating considerable uncertainty surrounding future fuel price trajectories. The consensus estimate hovers around $5.40–$5.52, according to LSEG and FactSet data.
JPMorgan adopted the most conservative stance, reducing its forecast from $7.05 down to just 15 cents. Analyst Jamie Baker stated the team had “embraced” a full-year jet fuel assumption that the bank believes fare increases cannot fully offset — though JPMorgan retained an Overweight rating on the shares.
UBS analyst Atul Maheswari maintained a Buy rating with a $5.12 EPS projection, while acknowledging he would understand if Delta opts to withdraw its full-year guidance altogether.
In January, Delta had provided full-year adjusted EPS guidance ranging from $6.50 to $7.50. Bastian elected against updating that range during Wednesday’s announcement.
