Delta Air Lines (DAL) Q1 2024 Earnings: What to Expect

Delta Airlines airplanes on the tarmac
Credit: Elijah Nouvelage / Reuters - stock.adobe.com

Thanks to a resurgence in business and holiday travel activity, airline stocks were one of the strongest sectors in 2023, outperforming the broader S&P 500 index. Delta Air Lines (DAL) have been one of the beneficiaries of a robust global travel demand, pushing Delta stock almost 30% higher over the past six months, including 15% year to date, besting the 9% rise in the S&P 500 index.

What’s more, over the past year, the sock has risen 36%, besting the broader index’s 27% rise. But ahead of its first quarter fiscal 2024 earnings results, due before the opening bell Wednesday, investors want to know whether it’s time to lock in some profits before any turbulence arrives. Despite the caution, there’s still tons of value in Delta, given the airline's strong footing in both the domestic and international air travel markets.

According to the International Air Transport Association, the global airline industry is poised to earn a net profit of $25.7 billion in 2024, which would equate to a 10% rise year over year. Meanwhile, operating profit is projected to reach $49.3 billion in 2024, which is expected to be an $8.6 billion jump from last year. Just as impressive, the industry is expected to enjoy a 7.6% jump in revenue, reaching a record $964 billion in 2024. Close to 5 billion people are expected to travel in 2024, compared the pre-Covid record of 4.5 billion people in 2019.

All of these strong trends bode well for Delta in the new year. What’s more, investors are also encouraged by the fact that the company’s growth prospects and liquidity have drastically improved. As such, investors will focus on management’s commentary to detect any bullishness in booking pricing, capacity growth from both domestic and international travel, where it has reported a gradual recovery. As such, Delta remains one of the better bargains in transportation stocks.

For the three months that ended March, analysts expect Atlanta-based transportation giant to earn 35 cents per share on revenue of $12.55 billion. This compares to the year-ago quarter when earnings were 25 cents per share on $11.84 billion in revenue. For the full year, ending in December, earnings are projected to be $6.44 per share, rising from $6.25 a year ago, while full-year revenue of $57.06 billion would rise 4.4% year over year.

The quarterly and full-year estimates have remained steady since the start of the quarter, suggesting analysts aren’t expecting any major surprises in the upcoming earnings results. The fact that there have been no revisions from analysts even as Delta Air Lines' CEO, Ed Bastian, last month during the 2024 Industrial Conference, provided significant insight into the company's operations and outlook.

From a demand perspective, Bastian boasted that "demand is strong,” highlighting that the company "had 9 of the top 10 sales days in [its] history all within the last 10 weeks.” In a display of even more confidence, Bastian discussed Delta’s booking strength, and believes the airline is well-positioned to enjoy increased demand as the year progresses, thanks to its premium offerings that deliver higher margins for the company.

Given these positive fundamental trends, its management has done a remarkable job navigating the company through the tough situation caused by the pandemic. The fourth quarter demonstrated that strength as Delta reported a strong bottom line beat, despite facing a tough Q4 with fuel prices spiking. Q4 revenue rose 6% to $14.22 billion, topping estimates by $420 million, while adjusted EPS of $1.28 beat by 12 cents.

Even more impressive, full-year operating margin expanding by four points to 11.6 percent, suggesting that the airline was able to realize efficiencies by lowering costs. Given these improving fundamental trends, Delta remains one of the better bargains in transportation stocks.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Richard Saintvilus

After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.

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