Delta Air Lines Shares Rally After Strong Q3 Earnings Beat Expectations
Delta Air Lines (NYSE: DAL) shares surged more than 7% at the market open on Thursday, after the airline reported third-quarter results that beat analyst forecasts and raised its full-year outlook, citing strong travel demand and solid operational performance.
Q3 Earnings and Revenue Exceed Analyst Forecasts
For the September quarter, Delta posted adjusted earnings per share (EPS) of $1.71, surpassing analyst estimates of $1.53. Revenue reached $15.2 billion, exceeding the consensus forecast of $15.04 billion and marking a 4.1% year-over-year increase.
The airline now expects full-year adjusted earnings of about $6.00 per share, ahead of Wall Street’s $5.77 estimate, positioning results at the upper end of previous guidance.
CEO Highlights Execution and Customer Experience
“Delta’s competitive advantages have never been stronger,” said CEO Ed Bastian, crediting the airline’s employees for “elevating the customer experience and extending our industry leadership.”
He added that the company delivered results “at the top end of expectations” thanks to disciplined execution and improving fundamentals.
Revenue Streams Show Broad-Based Growth
Delta’s diversified revenue mix fueled performance this quarter:
- Premium cabin revenue rose 9% year-over-year.
- Loyalty program revenue also climbed 9%.
- American Express remuneration hit $2 billion, up 12% from last year.
- Corporate sales rebounded 8%, reflecting ongoing business travel recovery.
Outlook: Strong Guidance for Q4 and Full Year
For the December quarter, Delta projects operating margins between 10.5% and 12%, with adjusted EPS ranging from $1.60 to $1.90.
The company expects total revenue growth of 2% to 4% compared to last year’s record performance.
Delta reaffirmed its full-year free cash flow target of $3.5 billion to $4 billion, consistent with long-term goals. The carrier has already paid down nearly $2 billion in debt this year, reducing its gross leverage to 2.4x by quarter-end.
Operational Efficiency and Analyst Reactions
During the quarter, non-fuel unit costs rose just 0.3% year-over-year, while fuel expenses dropped 8%, aided by an 11% decline in average fuel price per gallon.
Analysts welcomed the results. Barclays said Delta’s strong Q3 reflected “a positive inflection in domestic U.S. revenues,” and investors are now focused on transatlantic and corporate travel trends.
Meanwhile, Bank of America called Delta’s outlook “just what was needed,” noting that the results highlight structural improvements across the airline industry and maintaining a Buy rating on the stock.
