Delta Air Lines stock (DAL) fell on Wednesday, erasing early gains after the company topped first-quarter earnings forecasts. The dip occurred amidst a broader downturn among airline stocks, which initially led gains in the S&P 500 index during early trading.
Delta Air Lines announced an impressive 80% jump in its adjusted earnings for the first quarter, reaching 45 cents per share, alongside a 6% increase in revenue to $12.6 billion— a record high for the company in the first quarter.
The figures exceeded FactSet analysts’ projections, as they had anticipated a 44% rise in earnings to 36 cents per share and a revenue increase of 5.7% to $12.52 billion.
Delta highlighted a surge in corporate travel demand, with managed corporate sales climbing 14% compared to the previous year. Domestic unit revenues also increased by 3% year-over-year, setting a new record for the March quarter.
The airline reaffirmed its earnings forecast for the full year to be between $6 and $7 per share, aligning with the FactSet prediction of $6.45 per share. Delta also projected its free cash flow for 2024 to be in the range of $3 billion to $4 billion.
For the upcoming second quarter, Delta anticipates earnings to be between $2.20 and $2.50 per share, a decrease from the $2.68 per share reported last year. The airline also expects revenue growth of 5% to 7%. This guidance aligns with analyst expectations of $2.22 per share on revenue growth of 5.5% to $15.41 billion.
Multinational investment bank UBS recently began covering Delta Air Lines stock with a Buy rating and a target price of $59, citing potential for margin growth in 2024 and 2025 due to easing cost pressures later in the year and a positive turn in unit revenues, as reported by The Fly.
After an initial premarket jump of 4.2%, DAL stock fell by 2.3% by Wednesday's close. Delta stock has been on an upward trend since mid-January, rallying by 14.9% year-to-date.
DAL stock was down 0.15% in premarket trading on Thursday.
Competitor United Airlines (UAL) saw its shares decrease by 2.5% on Wednesday, dipping below their 50-day average after an early 2% gain. United has seen its stock rise by 2.7% in 2024.
American Airlines stock (AAL) dipped along with the broader market on Wednesday, dropping 3.9% after an initial 2.8% rise in premarket trading. American's stock has fallen by 2.4% year-to-date and is currently 6% below its 200-day line.
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