Delta Air Lines Lowers Profit Outlook but Remains Optimistic on Revenue
Shares of Delta Air Lines Inc. (DAL) surged 2.4% in premarket trading Thursday, rebounding from a three-month low. Despite reducing its third-quarter profit forecast, the company remains positive about revenue.
Lower Earnings Per Share but Strong Revenue Growth
Delta now anticipates earnings per share for the quarter ending in September to range between $1.85 and $2.05, a decrease from the previous estimate of $2.20 to $2.50. This falls short of the FactSet consensus of $2.31. However, the company expects its revenue to fall within the upper range of its initial growth projection of 11% to 14%. According to FactSet, this implies a growth rate of 12.7%, with revenue estimated at $14.48 billion.
Fuel Costs and Non-Fuel Expenses
In line with other airlines' recent updates, Delta has increased its estimate for fuel costs per gallon from $2.50 to $2.70 to a new range of $2.75 to $2.90. Moreover, the airline projects a 1% to 2% increase in non-fuel expenses compared to last year's figures, primarily driven by higher-than-anticipated maintenance costs.
Stock Performance
Delta's stock recently suffered a 2.8% drop on Wednesday, marking its lowest close since June 8. This decline followed a downward revision of earnings expectations by rival American Airlines Group Inc. (AAL). Nevertheless, Delta's stock has experienced a year-to-date rally of 20.4% as of Wednesday, outperforming both the U.S. Global Jets ETF (JETS) with a gain of 4.9%, and the S&P 500 (SPX) which has advanced 16.4%.
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