Delta Air Lines Earnings Set To Soar Nearly 500% As Consumers Prioritize ‘Experiences’

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Delta Air Lines (DAL) prepares to report fourth-quarter earnings early Friday, after raising its Q4 guidance and giving bullish 2023 outlook in mid December, on the back of robust travel demand. DAL stock rose for a fifth straight day Tuesday.

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In late 2022, Delta and other airlines sounded upbeat about the ongoing recovery in commercial travel demand. In contrast, companies in other industries warned of recession risk ahead.

Amid higher inflation, consumers are “prioritizing investing in themselves and experience,” Delta CEO Ed Bastian told CNBC in December. Airline companies and the broader travel industry are expected to benefit from this trend.

Delta earnings will kick off quarterly results for airlines and the overall travel sector.


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Delta Air Lines Earnings

Estimates: Analysts polled by FactSet expect Delta earnings to skyrocket 495%, year over year, to $1.31 per share. That would be below the company’s upwardly revised guidance given on Dec. 14, 2022 for Q4 EPS of $1.35 to $1.40 a share. Total revenue is seen growing nearly 35% to $12.737 billion. But that would mark the sixth straight quarter of slowing sales growth.

Results: Check back Friday before the market open.

Outlook: Analysts project Delta earnings per share will jump nearly 69% to $5.09 in 2023. They see revenue increasing 8% to $58.803 billion next year.

Their earnings expectations are at the low end of company guidance. On Dec. 14, Delta Air Lines guided 2023 earnings to nearly double to $5-$6 per share.

In 2023, Delta also expects to generate more than $2 billion of free cash flow, as it looks to further pay down debt.

DAL Stock

Shares of Delta Air Lines rose 3.6% to 38.09 in Tuesday’s stock market action. DAL stock extended a rally that has taken shares above the 50-day and 200-day moving averages, to the best level since June 2022.

DAL stock is now extended from any early entry. Shares are now building the right side of a deep cup base with a 46.37 buy point.

United Airlines (UAL) popped 5.5% Tuesday, also rising for a fifth consecutive session after retaking key averages. Southwest Airlines (LUV) climbed 1.7%, below key averages after holiday travel chaos left passengers stranded and gave the carrier a black eye.

United is due to report earnings Jan. 17 after the market close. Southwest is set to follow Jan. 26 before the market open.

Airline Stocks: Delta’s Recovery

As with other airlines throughout the Covid-19 pandemic, Delta Air Lines posted a string of losses. Delta earned $1.70 per share in Q4 2019 before posting six straight unprofitable quarters. Revenue plunged more than 60% in 2020.

Delta is expected to return to annual earnings growth in 2022. Both leisure and business travel continue to recover, the carrier said last fall. International travel, especially to Europe, has been particularly strong, it added.

Airlines have been broadly upbeat about travel demand. But some airline stock analysts worry about price increases — including airfares — as the recession risk grows.

The carriers also face higher fuel costs and pilot shortages. They have cut some routes and scaled back capacity expansion, while supply constraints have delayed deliveries of new aircraft.

The U.S. airline industry returned to profitability in 2022 as travel rebounded after the pandemic, highlighted by a busy summer travel season.

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