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delta airlines posted its highest quarterly revenue and profit to date thanks to rising travel demand that has defied fears of an economic slowdown for months.
International travel and demand for premium seats such as first class were strong during the three months ended June 30, while a 22% drop in Delta’s fuel costs boosted the airline’s results.
The Atlanta-based airline on Thursday raised its 2023 earnings forecast to an adjusted range of $6 to $7 a share, up from its estimate last month at the high end of a range of $5 to $6 a share. action.
Delta shares rose more than 4% in premarket trading after reporting the results.
Here’s how Delta performed in the quarter ended June 30 compared to Wall Street expectations based on Refinitiv Consensus Estimates:
- Adjusted earnings per share: $2.68 cents vs. $2.40 expected.
- Adjusted income: $14.61 billion vs. $14.49 billion expected.
Delta is the first of the US airlines to publish second quarter results and its report sets an upbeat tone for the rest of the year.
CEO Ed Bastian said he expects consumers’ desire to travel to drive bookings for years to come.
“I think the trends we’ve seen this year are going to continue,” he said in an interview.
In the third quarter, Delta expects to earn between $2.20 and $2.50 per share, above analyst expectations, on a 16% increase in capacity. The airline forecast an increase in revenue of up to 14% over the previous year.
Delta’s net income for the quarter was $1.83 billion, or $2.84 per share, up from $735 million, or $1.15 per share, a year ago. Adjusting for certain items, earnings per share were $2.68 for the quarter, compared to $1.44 in the same period last year.
The airline’s net income was the highest since the fourth quarter of 2013, when the airline put more than $8 billion in tax loss credits on its balance sheet.
Delta generated $14.61 billion in revenue, adjusted to eliminate sales from its refinery, in the three months ended June 30, up 19% from a year ago, and above analyst estimates. Total revenue of $15.58 billion increased 13% over the prior year.
Transatlantic travel was particularly strong in the spring and early summer, with revenue from such travel up more than 60% over the prior year, compared to an 8% increase in domestic revenue and a 21% increase % in overall passenger revenue. Delta and its rivals have increased capacity in Europe this year in anticipation of a revival. (Bastian told CNBC that he recently traveled to the south of France.)
Premium ticket revenue growth also outpaced Main Economy cabin sales growth.
Unit revenue, a measure of how much airlines generate for each seat they fly a mile, rose 1% year-over-year, a 17% increase in capacity.
“If you were to ask any quarter where we increased capacity by high double digits and maintained our overall pricing, that would be pretty amazing,” Bastian said.
