James D. Morgan | Getty Images Delta Air Lines expects to return to profit this quarter thanks to increased bookings – and fares – which help offset rising fuel costs. Shares rose more than 6% in preliminary trading following the announcement of the airline’s results. The airline said Wednesday it expects the unit’s revenue to double-digit in the second quarter from 2019 and that total sales will recover to 97% of sales generated three years ago before Covid destroyed travel demand. Delta is also stepping up its program as the peak of the travel season approaches and plans to fly 84% of its 2019 capacity levels this quarter, the Atlanta-based airline said in its earnings announcement for the first quarter. Airlines are facing higher fuel prices and other costs associated with rising growth. U.S. domestic airfare increased by 20% last month compared to 2019, according to Adobe, indicating that passengers are willing to pay more to travel after two years of pandemic. Delta expects its cost, excluding fuel, to increase by 17% in the second quarter as it increases flights and continues to hire to meet demand. See how Delta performed in the first quarter compared to what analysts expected, according to Refinitiv average estimates:
Adjusted loss per share: $ 1.23 versus $ 1.27 expected.
Revenue: $ 9.35 billion versus $ 8.92 billion expected.
The carrier reported a net loss of $ 940 million in the first three months of the year with revenue of $ 9.35 billion, more than the $ 8.92 billion in sales expected by analysts in a Refinitiv poll. Sales were down 11% from 2019 levels. Air carriers are comparing the results with 2019 to show their recovery from pre-pandemic performance. Delta’s fuel bill increased by 6% from 2019 to $ 2.09 billion, although its capacity decreased by 17%. Jet fuel prices have more than doubled since last year and have risen more than 50% since the beginning of the year, according to Platts. “As our brand preferences and demand dynamics grow, we are successfully recovering higher fuel prices, leading to our prospects for an adjusted operating margin of 12 to 14% and strong free cash flows in the June quarter,” he said. Ed Bastian in a press release. In January, Delta forecast a first-quarter loss as new Covid cases peaked. Adjusting for lump sums, Delta recorded a loss of $ 1.23 per share for the period, slightly better than the adjusted loss of $ 1.27 expected by analysts. The airline said other areas of its operations had improved. It generated $ 1.2 billion from its partnership with American Express credit cards, an increase of 25% from the same quarter of 2019, while spending increased by 35% compared to three years ago. First-quarter revenue from its refinery was $ 1.2 billion, compared with $ 48 million three years earlier. Delta closed the quarter with $ 12.8 billion in liquidity. Delta executives will have a phone call at 10 a.m. ET to discuss the results with analysts and the media.
