Delta Air Lines (DAL) Earnings for the Second Quarter of 2024

Shares of Delta fell about 9% in premarket trading. Other US airlines were also trading lower.

The Atlanta-based carrier on Thursday kicked off an airline revenue season marked by full flights, but profits under pressure as costs rise and capacity increases on fares. The Transportation Security Administration said it screened more than 3 million people for the first time at U.S. airports on Sunday.

Delta stands out as the airline industry’s most profitable carrier, and Thursday’s report is a sign that competitors, particularly those focused on the oversupplied U.S. air travel market, may struggle this summer.

Rival United Airlines, which reports results next Wednesday, is trying to catch up to Delta’s profits, and the two carriers are racing to add more premium seats that bring more revenue from customers. Analysts have higher “buy” ratings on Delta and United compared to other U.S. airlines.

Here’s how Delta performed For the three months ended June 30Compared to Wall Street expectations based on consensus estimates from LSEG:

  • Adjusted earnings per share: $2.36 and $2.36 expected
  • Adjusted Earnings: $15.41 billion and $15.45 billion expected

In the three months ended June 30, Delta brought in $15.4 billion in adjusted revenue, up 5.4% from a year ago and just shy of Wall Street estimates. Net income fell nearly 30% from a year ago to $1.31 billion, or $2.01 a share, while operating expenses increased 10% from last year. Adjusted for one-time items, Delta posted earnings of $1.53 billion, or $2.36 a share, according to analysts’ estimates.

“The second quarter was a very strong performance,” CEO Ed Bastian said in an interview. “You’re seeing what’s happening with the impact on the domestic market in the ongoing low-cost discounting this quarter.”

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Bastian said the end of the summer would match up better with lower job demand in the United States. Delta said corporate travel continues to grow and most customers expect to maintain or increase their corporate travel spending this quarter and beyond.

The carrier expects its flying capacity to grow 5% to 6% in the third quarter compared to last year, a slower clip than the 8% it expanded in the second quarter.

Revenue from international travel has remained strong since the pandemic subsided, although airlines have expanded schedules, meaning more competition for customers. Unit revenue for trans-Atlantic flights will gain 1 percentage point from the Summer Olympics in Paris, Delta said. Bastian told CNBC that the impact was about $100 million between June and August. The airline has more capacity to the French capital than rivals through its partnership with Air France.

Delta reported growth in premium tickets for first class, up 10% to $5.6 billion in the second quarter, while revenue from coach tickets rose 0.3% to about $6.7 billion. Its lucrative American Express credit card deal generated $1.9 billion, up 9% from last year.

Bastian said Delta is “pretty well insulated” from the industry’s overcapacity because it gets more revenue from premium seats and other sources than from standard coach tickets.

Delta reiterated its full-year earnings forecast of $6 to $7 a share and said it still expects free cash flow of up to $4 billion.

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