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Delta Air Lines (DAL) Q1 2022 earnings

Delta Air Lines (DAL) Q1 2022 earnings

Delta Air Lines expects to return to profit this quarter thanks to a jump in bookings — and fares — that helps offset higher fuel costs.

The company’s shares are up 6% on the day, while shares of American Airlines and United Airlines, which will announce results next week, are up more than 10% and more than 5%, respectively.

Delta said Wednesday that it expects unit revenue to be higher during the second quarter than in 2019 and that overall sales will recover to up to 97% of sales generated three years ago before Covid destroyed travel demand.

In March, Delta recorded the highest bookings in its history, CEO Ed Bastian told CNBC’s “Squawk Box” on Wednesday.

Bastian said he expects consumers to prioritize travel despite inflation, which has already driven up prices at supermarkets, gas stations and in the housing market.

“People have been locked up for the past two years,” he said. “They have finished investing in their home and garden and want to go see someone else’s garden for a change.”

Delta is ramping up its schedule as peak travel season approaches and plans to fly 84% of its 2019 capacity levels this quarter, the Atlanta-based airline said in its quarterly release.

Airlines face rising fuel prices and other costs associated with ramping up backup operations. Prices for domestic airline tickets in the United States rose 20% last month compared to 2019, according to Adobe data, in a sign that passengers are willing to pay more to travel two years into the pandemic.

Bastian said the airline is well-equipped for the summer. Staff shortages, especially pilots, have stymied airline growth and exacerbated flight disruptions over the past year.

Delta expects its costs, excluding fuel, to rise 17% in the second quarter as flights increase and continue to hire to meet demand.

Here’s how Delta fared in the first quarter compared to what analysts expected, according to average estimates compiled by Refinitiv:

  • Adjusted loss per share: Expected $1.23 vs. $1.27.
  • Revenues: $9.35 billion versus the $8.92 billion forecast.

The carrier reported a net loss of $940 million for the first three months of the year on revenue of $9.35 billion, above the $8.92 billion in sales analysts had expected in a Refinitiv survey. Sales are down 11% from 2019 levels.

The carriers were comparing results compared to 2019 to show their recovery versus pre-pandemic performance.

A Delta Air Lines Airbus A-350, flight number DL40 to Los Angeles, takes off from Kingsford Smith International Airport on July 26, 2021 in Sydney, Australia.

James DeMorgan | Getty Images

Delta’s first-quarter fuel bill rose 6% from 2019 to $2.09 billion, even though its capacity was down 17%. Jet fuel prices have more than doubled from last year and are up more than 50% since the start of the year, Platts said.

“With our brand preferences and demand momentum growing, we have successfully restored higher fuel prices, driving our forecast for an adjusted operating margin of 12 to 14 percent and strong free cash flow in the June quarter,” Bastian said in the quarterly release.

In January, Delta expected a first-quarter loss as new Covid cases were at their peak. Adjusting for one-time items, Delta posted a loss per share of $1.23 for the period, slightly better than the $1.27 adjusted loss that analysts had expected.

The company said other areas of its business also improved. It made $1.2 billion from its American Express credit card partnership, up 25% from the same quarter in 2019 while spending was up 35% from three years ago. Refinery revenues in the first quarter amounted to $1.2 billion, compared to $48 million three years ago.

Delta ended the quarter with $12.8 billion in cash.

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