Delta Air Lines Stock Falls 8% On Weak Outlook

Shares of Delta Air Lines (DAL) are down 8% after the U.S. carrier issued forward guidance that fell short of Wall Street’s expectations.

Atlanta-based Delta reported second-quarter earnings per share (EPS) of $2.36 U.S., which matched analysts’ forecasts.

Revenue in the period totaled $15.41 billion U.S., which missed consensus estimates that called for $15.45 billion U.S.

The company’s net income declined 30% from a year earlier as operating expenses increased 10% from last year.

While management acknowledged they are benefitting from record airline travel, they said profits are being pressured as costs rise and they use discounted fares to attract consumers.

Looking ahead, executives forecast record revenue for this year third quarter due to strong summer travel. However, the outlook still fell short of analysts’ estimates.

Delta now expects to grow its flying capacity by 5% to 6% in this year’s third quarter compared with last year, a slower pace than the 8% it expanded by during the second quarter.

In a bright spot, Delta said that corporate travel continues to recover from pandemic lows and that it expects corporate travel spending to continue rising going forward.

For the current third quarter, Delta expects to break revenue records, saying it anticipates sales will rise as much as 4% and that it will post earnings of $1.70 U.S. to $2 U.S. a share.

That outlook fell short of the $2.05 U.S. a share that analysts had penciled in for the company.

Management also reiterated their full-year earnings forecast of $6 U.S. to $7 U.S. a share and said they expect to generate free cash flow of $4 billion U.S. for 2024.

Prior to today (July 11), Delta’s stock had risen 16% this year and was trading at $46.86 U.S. per share.

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