Delta sees record revenue as business travel accelerates, but stock turns lower

By Tomi Kilgore

Stock climbs toward a three-year high, as 'robust' travel demand continues into the current quarter

Delta Air Lines Inc. reported first-quarter revenue that rose to record levels, fueled by accelerating business-travel demand, but the air carrier's stock reversed course to trade lower amid a broad-market selloff.

The company said that the "robust" demand has continued into the current quarter, which should lead to another revenue record.

Chief Executive Ed Bastian said Delta delivered its "best operational reliability" in its history, leading the air-travel industry in completion factor and on-time performance as it operated 26 "cancel-free, brand-perfect days" in the quarter.

The stock (DAL) climbed as much as 4.1% soon after the open, before turning lower. The stock was down 0.5% in afternoon trading, but outperformed the S&P 500 Index SPX, which sank 1.4% on the back of disappointing consumer inflation data, and its peers, as the U.S. Global Jets ETF JETS dropped 1.5%.

Delta said the continued introduction of modern aircraft, new premium cabin service offerings and the continued expansion of its free Wi-Fi offerings was helping drive travel demand.

"Delta's core consumers are in a healthy position, and travel remains a top purchase priority," Bastien said in a post-earnings call with analysts, according to a FactSet transcript. "Generational shifts and evolving consumer preferences are driving secular growth in premium experiences," while business travel demand has taken "another meaningful step forward" this year.

For the quarter to March 31, Delta swung to net income of $37 million, or 6 cents a share, from a net loss of $363 million, or 57 cents a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share rose to 45 cents from 25 cents, and beat the FactSet consensus of 36 cents.

Revenue grew 7.8% to $13.75 billion, well above the FactSet consensus of $12.52 billion, as passenger revenue increased 6.9% to $11.13 billion.

"Managed corporate sales grew 14% year-over-year, led by the return of large corporate accounts, particularly in the technology, consumer services and financial services sectors," Delta said. "Recent corporate survey results indicate that 90% of companies expect their travel volumes to increase or stay the same in the June quarter and beyond."

Load factor improved to 83% from 81% and topped expectations of 81.7%, as traffic increased 9% to 54.21 billion revenue passenger miles and capacity was up 7% to 65.54 billion available seat miles.

Looking ahead, the company expects second-quarter revenue growth of 5% to 7%, while the current FactSet revenue consensus of $15.41 billion implies 5.5% growth. Adjusted EPS is expected to be $2.20 to $2.50, surrounding the FactSet consensus of $2.22.

For full-year 2024, Delta reiterated its EPS guidance range of $6 to $7 and its free-cash-flow forecast of $3 billion to $4 billion.

The stock has climbed 17.1% year to date, while the U.S. Global Jets ETF has gained 5.7% and the S&P 500 has advanced 7.8%.

-Tomi Kilgore

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04-10-24 1317ET

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