June 12th, 2024

Delta Air Lines posts a narrow Q1 profit and says travel demand remains strong despite flight scares

By David Koenig, The Associated Press on April 10, 2024.

FILE - A Delta Air Lines plane lands at Logan International Airport, Jan. 26, 2023, in Boston. Delta reports earnings on Wednesday, April 10, 2024. (AP Photo/Michael Dwyer, File)

Delta Air Lines eked out a narrow first-quarter profit and said Wednesday that demand for travel is strong heading into the summer-vacation season, with travelers seemingly unfazed by recent incidents in the industry that ranged from a panel blowing off a jetliner midflight flight to a tire falling off another plane during takeoff.

Delta reported the highest revenue for any first quarter in its history and a $37 million profit. It expects record-breaking revenue in the current quarter as well. The airline said that second-quarter earnings will likely beat Wall Street expectations.

Shares of Delta Air Lines Inc., based in Atlanta, jumped more than 4% before the opening bell Wednesday and other airlines were pulled higher as well on the performance.

CEO Ed Bastian said Delta’s best 11 days ever for ticket sales occurred during the early weeks of 2024.

If travelers are worried about a spate of problem flights and increased scrutiny of plane maker Boeing, “I haven’t seen it,” Bastian said in an interview. “I only look at my numbers. Demand is the healthiest I’ve ever seen.”

A slight majority of Delta’s fleet of more than 950 planes are Boeing models, but in recent years it has bought primarily from Airbus, including a January order for 20 big Airbus A350s. As a result, Delta will avoid the dilemma facing rivals United Airlines and American Airlines, which can’t get all the Boeing planes they ordered. United is even asking pilots to take unpaid time off in May because of a plane shortage.

“Airbus has been consistent throughout these last five years (at) meeting their delivery targets,” Bastian said.

Delta does not operate any Boeing 737 Max jets, the plane that was grounded worldwide after two fatal crashes in 2018 and 2019, and which suffered the panel blowout on an Alaska Airlines flight this year. However, Delta has ordered a new, larger version of the Max that still hasn’t been approved by regulators. Bastian said Delta will be happy to use the Max 10 when they arrive.

Delta’s first-quarter profit follows a $363 million loss a year ago, when the results were weighed down by spending on a new labor contract with pilots.

“We expect Delta to be one of the few airlines to report a profit in the March quarter,” TD Cowen analyst Helane Becker said before Delta’s results were released.

Delta said that excluding special items, it earned 45 cents per share. Analysts were expecting 36 cents per share, according to a FactSet survey.

The airline forecast second-quarter earnings of $2.20 to $2.50 per share. The Wall Street consensus was $2.22 per share.

First-quarter revenue rose 8%, to $13.75 billion. Putting Delta’s Pennsylvania refinery aside, operating revenue was slightly more than analysts predicted. The airline said second-quarter revenue will be 5% to 7% higher than a year ago.

The airline reported that large corporate customers – who were slower than leisure travels to resume flying after the pandemic – are spending more on travel, including firms in technology and financial services.

Delta has boosted profit by focusing more on premium passengers who pay the highest fares, and raking in money from a credit-card partnership with American Express.

Costs could rise too, however. Jet fuel is higher than it was a year ago, following a run-up in oil prices, and Delta is spending more on aircraft maintenance this year.

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