Delta Air Lines Soars on Strong Earnings and Upbeat Forecast

Delta Air Lines is celebrating a stellar third quarter, with the airline’s profit forecast exceeding estimates due to higher fares and resilient luxury travel demand. The Atlanta-based carrier reported adjusted earnings of $1.71 per share for the quarter, surpassing analyst expectations of $1.53 per share. Revenue also rose 4% year over year to $15.2 billion, beating forecasts of $15.06 billion.

Key Highlights:

• Earnings Per Share: $1.71 adjusted vs. $1.53 expected
• Revenue: $15.2 billion adjusted vs. $15.06 billion expected
• Premium Travel Revenue: Increased 9% to nearly $5.8 billion, driven by strong demand for high-end products
• Main Cabin Revenue: Fell 4% to about $6 billion

Delta’s premium segment continues to shine, with revenue from first-class and extra-legroom economy seats rising 9% in the third quarter. CEO Ed Bastian noted that there are no signs of a consumer pullback for premium products, with revenue from upmarket options on track to eclipse main cabin sales next year.

Positive Outlook:

Delta expects adjusted earnings of $1.60 to $1.90 per share for the fourth quarter, above analyst estimates of $1.65 per share. The airline also forecasts revenue growth of up to 4% in the final quarter, exceeding Wall Street’s expectations of 1.7% growth.

Market Reaction:

Shares of Delta Air Lines surged over 5% in morning trading following the earnings announcement. The optimism also spread to other airlines, with United Airlines, American Airlines, JetBlue, and Alaska Air gaining between 2% and 5%.

Future Prospects:

Delta’s strong performance and upbeat forecast have led analysts to reaffirm their confidence in the airline’s prospects. TD Cowen analyst Tom Fitzgerald maintains his top pick for Delta, citing its strong position in the premium travel segment and diversified revenue streams.

With its solid earnings and positive outlook, Delta Air Lines is well-positioned to deliver top-line growth, margin expansion, and earnings improvement in the coming year