Lukas Wunderlich
Delta Air Lines (NYSE:DAL) traded higher on Wednesday after topping estimates with its Q1 earnings report.
Revenue was up 7.8% year-over-year to a record tally for the quarter of $13.75B. The airline company also churned up adjusted operating income of $640M, an operating margin of 5.1%, and operating cash flow of $2.5B. Domestic unit revenue improved sequentially and was a record for the March quarter. Notably, corporate travel demand accelerated during the quarter and international travel strength continued. Total revenue per available seat mile fell 0.7% to $0.1917, while non-fuel cost per available seat mile was up 1.5% to $0.14.08. EPS came in at $0.45 vs. $0.37 consensus and $0.25 a year ago.
On the balance sheet, Delta (DAL) delivered $1.4B of free cash flow in the quarter after paying over $1B in profit sharing to employees and reinvesting $1.1B in the business. Delta (DAL) also repaid nearly $1B of debt and ended the quarter with a leverage ratio of 2.9X. Delta (DAL) expects to repay at least $4B of debt this year and is on track to improve full year leverage.
Looking ahead, Delta (DAL) said strong travel demand is continuing in the current quarter. The company expects total revenue growth of 5% to 7% percent compared to a year ago on TRASM of flat to -2%. “Within this outlook, all geographic entities are expected to achieve unit revenue approximately flat to last year, except Latin, where we expect a double-digit decline as we lap strong performance and continue to profitably invest in the network,” noted Delta President Glen Hauenstein.
Delta Air Lines (DAL) sees Q2 adjusted EPS of $2.20 to $2.50 vs. $2.23 consensus and full-year EPS of $6.00 to $7.00 vs. $6.46 consensus.
Shares of Delta Air Lines (DAL) rallied 4.88% in premarket action on Wednesday after the strong earnings report. Within the airline sector, United Airlines (UAL) moved up 3.66% and American Airlines Group (AAL) gained 3.37%. Southwest Airlines (LUV) added 1.77% and JetBlue (JBLU) pushed 1.36% higher in the early session.