Delta Air Lines (NYSE: $DAL) Reports Quarterly Earnings Beating Expectations – Stock Gains 60%+ In The Last 12 Months

Delta Air Lines, Inc. (NYSE: $DAL)

Delta Air Lines, Inc. (NYSE: $DAL) is a major American airline providing scheduled air transportation for passengers and cargo. It was founded in 1924 as a crop dusting operation and has evolved into one of the largest global airlines. The Atlanta-based airline also operates over 300 destinations in more than 60 countries.

On April 10, 2024, Delta Air Lines announced its financial results for Q1 2024.

Financial Highlights

Delta Air Lines’ impressive financial performance in the first quarter fiscal 2024 highlights its operational excellence and strategic focus. The company reported revenue of $12.6 billion, a 6% increase compared to the same period last year and in line with analyst estimates of $12.5 billion. Earnings per share came in at $0.45, aligning with the projected $0.3553 and reflecting the airline’s ability to drive profitability. 

Delta’s pre-tax income stood at $380 million, surpassing estimates of $221.4 million, highlighting its strong cost control and revenue management. Its adjusted operating margin was 5.1%, demonstrating its operational efficiency and resilience, while free cash flow was $1.4 billion, showcasing its financial strength and ability to invest in its business.

Delta Air Lines Full Year 2024 Guidance

The airline reiterated its full-year guidance, expecting earnings per share of $6 to $7 and $3B to $4B in free cash flow. Its upbeat outlook and strategic initiatives position the company well to navigate the evolving industry landscape and continue its strong performance.

“Delta expect to continue our momentum with a forecast of record revenue, a mid-teens operating margin, and EPS of $2.20 to $2.50 for the June quarter, reiterating our full-year outlook for EPS of $6 to $7 and free cash flow of $3 to $4 billion,” said CEO, Ed Bastian.

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Operational Excellence Propels Airline’s Profitability

Delta Air Lines has defied expectations, showcasing resilience and adaptability in a challenging landscape. The airline reported a remarkable turnaround in the first quarter, swinging to a profit with record sales despite lingering concerns about inflation and economic uncertainty.

Delta’s Chief Executive Officer, Ed Bastian, expressed confidence in the company’s performance, pointing to strong bookings for leisure and business travel as the peak season approaches. This optimistic outlook is reinforced by the company’s forecast for the second quarter, with anticipated earnings surpassing analysts’ expectations.

“Thanks to the extraordinary work of our 100,000 people, Delta is delivering the best operational reliability in our history, and we have widened the gap to our competitors,” said Bastian. “We were thrilled to recognize their efforts with $1.4 billion in profit sharing payouts during the quarter.”

Delta’s strategic focus on efficiency and optimization has been a key driver of its success. Following an aggressive expansion phase post-pandemic, the airline has shifted gears to streamline operations and enhance profitability. This approach includes a prudent approach to hiring, with Delta slowing down recruitment while maintaining a keen eye on driving efficiency gains.

Diverse Revenue Streams Fuel Growth

Delta’s diversified revenue streams, including Loyalty, Premium, Cargo and Maintenance, Repair, and Overhaul (MRO), comprised 57% of total revenues in the quarter. Premium revenue grew 10% year-over-year, continuing to outperform Main Cabin. Loyalty revenue was up 12%, driven by continued co-brand spend growth and increasing premium card mix.

The airline’s remuneration from American Express for the March quarter was $1.7 billion, approximately 5% higher than the March quarter of 2023.

Cost Control and Balance Sheet Strength

Delta Air Lines’ CFO, Dan Janki, highlighted the company’s cost performance, noting that the operational excellence resulted in the best March quarter completion factor in the airline’s history, providing an incremental point of capacity growth and unit cost favorability.

“For the March quarter, we delivered pre-tax income of $380 million, an improvement of $163 million over last year,” said Janki. “Delta’s operational excellence resulted in the best March quarter completion factor in our history, providing an incremental point of capacity growth and unit cost favorability with non-fuel unit costs 1.5 percent higher than last year.”

The company’s balance sheet strength is also evident, with Delta reporting $1.4 billion in free cash flow during the quarter despite significant profit-sharing payments and reinvestments in the business. The airline’s adjusted debt to EBITDAR ratio improved to 2.9x, down from 3.0x at the end of 2023, reflecting its commitment to strengthening its financial position.

Delta Air Lines Stock Performance

Delta Air Lines is trading at $46.24, down 2.28% from Tuesday’s previous close at $47.32. The stock’s performance reflects the market’s positive sentiment toward the company’s remarkable turnaround in the first quarter. 

The technical indicators further validate the bullish thesis for Delta. The stock has a moderate Relative Strength Index (RSI) of 64.35, indicating a continuous bullish run following the positive earnings review. Additionally, the stock is trading above its 200 DMA, further reinforcing the bullish sentiment.

Delta Air Lines, Inc. (DAL)
Delta Air Lines (NYSE: $DAL)

Should You Consider Buying Delta Air Lines Stock in 2024?

Delta Air Lines’ impressive performance in Q124 suggests the stock could be a compelling investment opportunity. The company’s resilience, operational efficiency, and strategic focus on optimization have propelled it to profitability amid macroeconomic headwinds.

Strong bookings for leisure and business travel, plus its forecast for record revenue and strong earnings in the second quarter, stress Delta’s ability to navigate the industry’s recovery. Additionally, Delta’s commitment to enhancing its premium offerings and diversifying its revenue streams further strengthens its long-term growth possibilities, and Delta Air Lines could be a stock worth considering.

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