Delta Air Lines posted its highest quarterly revenue and earnings ever due to scorching travel demand that has defied fears of an economic slowdown for months.
International travel and demand for premium seats like first-class were standouts in the course of the second quarter, while a 22% drop in Delta’s fuel costs boosted the carrier’s bottom line.
The Atlanta-based airline on Thursday hiked its 2023 earnings forecast to an adjusted $6 to $7 a share, up from its estimate last month on the high end of a $5 to $6 per share range.
CEO Ed Bastian said he expects consumers’ desire for travel will fuel bookings for years, calling the present period the “mid-innings” of travel growth.
“I believe the trends that we have seen this 12 months are going to proceed,” he said in an interview.
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Bastian said international demand stays robust into the autumn and he expects a slow but regular increase in corporate travel bookings.
Delta is the primary of the U.S. airlines to post second-quarter results, and its report sets an upbeat tone for the remainder of the 12 months. United Airlines and American Airlines are scheduled to report next week.
Within the third quarter, Delta expects to earn $2.20 to $2.50 a share, above analysts’ expectations, on a 16% increase in capability. The carrier forecast a jump in revenue of as much as 14% from a 12 months earlier.
Here’s how Delta performed within the quarter ended June 30 compared with Wall Street expectations based on Refinitiv consensus estimates:
- Adjusted earnings per share: $2.68 cents vs. $2.40 expected.
- Adjusted Revenue: $14.61 billion vs. $14.49 billion expected.
Trans-Atlantic travel was particularly strong within the spring and early summer, with revenue from those trips up greater than 60% from a 12 months ago, compared with an 8% increase in domestic revenue and 21% rise in passenger revenue overall. Delta and its rivals have ramped up capability to Europe this 12 months in anticipation of the resurgence. (Bastian told CNBC he recently traveled to the south of France.)
Premium ticket revenue growth also outpaced that of fundamental cabin economy.
Unit revenues, a measure of how much airlines are generating for each seat they fly a mile, rose 1% 12 months over 12 months, and a 17% rise in capability.
“For those who were to ask any quarter during which we grew capability by high double digits and we held our overall pricing, that will be pretty amazing,” Bastian said.
Overall, fares dropped nearly 19% within the U.S. last month from a 12 months ago and eight% from May, as airlines ramped up service for the height travel season, in keeping with the most recent inflation read.
Bastian said that capability constraints and robust demand drove fares high last 12 months but that “we’re in a normalized environment today.” and that Delta’s pricing remains to be holding up.
Delta’s net income for the quarter was $1.83 billion, or $2.84 a share, up from $735 million, or $1.15 a share, a 12 months ago. Adjusting for certain items, per-share earnings were $2.68, up from $1.44 in the identical period last 12 months.
The airline’s net income was the very best for the reason that fourth quarter of 2013, when the airline put greater than $8 billion in tax-loss credits back on its balance sheet.
Delta brought in $14.61 billion in revenue, adjusted to strip out sales from its refinery, within the three months ended June 30, up 19% from a 12 months ago, and above analysts estimates. Total revenue of $15.58 billion was up 13% from a 12 months earlier.
