Delta's Joe Esposito Says Current Airline Trends Provide Constructive Setup: 'Confident In The Sustainability Of Yield And Revenue Strength'

The airline reported better-than-expected second-quarter results despite higher fuel prices and provided a forecast that surpassed estimates.

• Delta’s revenue came in at $19.76 billion, while adjusted earnings per share were $1.56.
• Fuel expense in the second quarter rose 77% to $4.41 billion.
• For the third quarter, the company guided EPS in the range of $2.00 to $2.50.

Delta Air Lines’ (DAL) chief commercial officer, Joe Esposito, said the airline is witnessing continued momentum across its customer segments and expects it to persist through the year. 

“We are confident in the sustainability of yield and revenue strength,” said Esposito. “While still early, current trends provide a constructive setup for this strength to extend into the December quarter."

He also guided modest capacity expansion in the third quarter (Q3), which will contribute to mid-teens revenue growth from a year ago. The airline on Friday reported second-quarter results that were ahead of the consensus estimate. 

Delta’s fuel expense in the second quarter (Q2) rose 77% to $4.41 billion, which it said was its “highest quarterly fuel expense in our history.” 

While the company continues to navigate high fuel expenses due to ongoing geopolitical tensions in the Middle East, Chief Financial Officer Erik Snell said non-fuel unit costs are expected to decline further by the end of the year as capacity growth normalizes, especially around the holiday travel season in the December quarter. 

At the time of writing, DAL stock traded 1.5% lower.

DAL’s Q2 Performance

For Q2, the company’s revenue came in at $19.76 billion, ahead of the $18.85 billion estimate polled by Koyfin, while adjusted earnings per share (EPS) were $1.56, ahead of the $1.50 per share estimate.

For the third quarter, the company guided EPS to the $2.00 to $2.50 range and an operating margin of 11% to 13%. The midpoint of the EPS outlook is above the $2.06-per-share consensus estimate. For the full year, it guided EPS to the $6.50 to $7.50 range, significantly ahead of the $5.97-per-share estimate, and free cash flow to $3 billion to $4 billion.

“Delta is executing from a position of strength, and we expect momentum to carry into the second half with double-digit margins and a return to earnings growth,” said CEO Ed Bastian, while adding that the quarterly results reflect “broad demand strength, growing brand preference and momentum across our diversified revenue base.”

What Retail Traders Think About DAL

On Stocktwits, retail sentiment toward DAL stock turned ‘extremely bullish’ to ‘bullish’ over the last 24 hours.

One user on the platform said the results were pretty good amid high gas prices, fears of attacks from Iran, and other problems.

View this Stocktwits post

DAL shares have climbed more than 28% so far this year and 75% over the past 12 months, outperforming the S&P 500.

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