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Delta Air Lines (DAL) Q2 2024 Earnings
Delta shares fell about 9% in premarket trading. Other U.S. airlines were also trading lower.
The Atlanta-based carrier on Thursday kicked off an airline earnings season marked by Planes full, but profits under pressure as costs rise and increased capacity weighs on fares. The Transportation Security Administration said it screened more than 3 million people for the first time on Sunday at U.S. airports.
Delta is a highlight in the aviation sector as the most profitable carrier, and Thursday’s report is a sign that competitors, particularly those focused on the oversupplied U.S. air travel market, could struggle this summer.
Rival United AirlinesDelta Air Lines, which reports earnings next Wednesday, is trying to catch up to Delta’s profitability, and both carriers have been racing to add more premium seats that generate more revenue from consumers. Analysts have the most “buy” ratings on Delta and United compared with other U.S. airlines.
See how Delta fared in the three months ended June 30compared to Wall Street expectations based on LSEG consensus estimates:
- Adjusted earnings per share: $2.36 vs. $2.36 expected
- Adjusted revenue: $15.41 billion vs. $15.45 billion expected
In the three months ended June 30, Delta posted adjusted revenue of $15.4 billion, up 5.4% from a year ago and below Wall Street estimates. Net income fell nearly 30% from a year ago to $1.31 billion, or $2.01 per share, with operating expenses up 10% from a year ago. Adjusting for one-time items, Delta reported earnings of $1.53 billion, or $2.36 per share, in line with analysts’ estimates.
“The second quarter was a really strong performance,” Chief Executive Ed Bastian said in an interview. “What you see happening is the impact in the domestic market for the lower fare discount that’s happening this quarter.”
Bastian said the industry’s lower capacity in the U.S. later in the summer will better match demand. Delta said corporate travel continues to increase and that most customers expect to maintain or increase their corporate travel spending this quarter and beyond.
The carrier expects to increase its flight capacity by 5% to 6% in the third quarter compared to last year, a slower pace than the 8% it expanded in the second quarter.
Revenue from international travel has been strong since the pandemic eased, although airlines have expanded schedules, meaning more competition for customers. Unit revenue for trans-Atlantic flights will take a 1 percentage point hit from the summer Olympics in Paris, Delta said. The hit is equal to about $100 million from June through August, Bastian told CNBC. The airline has more capacity to the French capital than rivals through its partnership with Air France.
Delta reported that growth in premium fares, such as first class, jumped 10% in the second quarter to $5.6 billion, while economy-class revenue rose 0.3% to about $6.7 billion. Its profitable American Express The credit card deal raised $1.9 billion, up about 9% from last year.
Bastian said Delta is “reasonably well insulated” from industry overcapacity because it gets much of its revenue from premium seats and other sources rather than standard economy fares.
Delta reiterated its full-year earnings forecast of $6 to $7 per share and said it still expects to generate free cash flow of up to $4 billion.