Delta Air Lines Stock Jumps After Bullish Q2 Revenue, Capacity Update

Delta said its sees solid Q2 revenue growth, as well as capacity that is close to 2019 levels, even as fuel costs continue to surge.

Delta Air Lines  (DAL) – Get Delta Air Lines, Inc. Report shares raced higher Wednesday after the carrier said June quarter revenues should return to pre-pandemic levels with free cash flow in the region of $1.5 billion, even as it cautioned on higher fuel costs.

In a trading update published Wednesday, Delta said the average price for its jet fuel will likely rise to between $3.60 and $3.70 per gallon this quarter, up from the $2.79 average over the first three months of the year. 

Still, capacity is likely to rise to between 82% and 83%, compared to the 84% tally logged in the second quarter of 2019 levels, the carrier said, as travel demand improves heading into the summer months. 

Top line revenues, Delta said, should come in between $12.4 billion and $12.5 billion, Detail said, with operating margins were forecast at between 13% and 14% helping produce free free cash flow of $1.5 billion. 

“Total unit revenues are expected to be 7 to 8 points better than initially expected on capacity that is 1 to 2 points lower than planned,” Delta said. “Unit revenue improvement is being driven by broad-based demand and pricing strength across consumer, business and international travel, with improvement through the quarter.”

“Non-fuel unit costs are expected to be up 20 to 22% compared to June quarter 2019, above prior guidance due to lower capacity, higher revenue-related selling expenses and investments in operational reliability,” the carrier added.  

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Delta share were marked 2.4% higher in pre-market trading to indicate an opening bell price of $42.69 each.

Delta said its adjusted loss for the three months ending in March was pegged at $1.23 per share, up from a loss of $3.42 per share over the same period last year and just inside of the Street consensus of a $1.29 per share loss. 

Group revenues, Delta said, surged 125% to $9.35 billion, well ahead of analysts’ estimates of a $8.83 billion tally. 

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