Delta Air Lines (DAL) earnings Q1 2023

ATLANTA — Delta Air Lines posted a wider loss than it previously estimated for the first three months of the year, but forecast revenue growth and profit for the second quarter that were ahead of analysts’ estimates, signaling strong travel demand despite weakness in other sectors.

CEO Ed Bastian on Thursday brushed off the potential of a consumer pullback in spending.

Air travel “is something the consumer’s prioritizing,” Bastian said in an interview. “They may be pulling back in other areas … but I don’t see it in our credit card data, I don’t see it in our bookings.”

The Atlanta-based carrier said it expects sales in the current quarter to increase by 15% to 17% over last year, with adjusted operating margins of as much as 16% and adjusted earnings per share of between $2 to $2.25. Analysts polled by Refinitiv had anticipated second-quarter revenue growth of 14.7% and earnings per share of $1.66.

The airline projected “record advance bookings for the summer.”

Bastian said the carrier is dialing back its capacity growth plans for the summer, however, in an effort to improve reliability. Airlines have faced aircraft delivery delays, staffing and training backlogs, and constrained airspace.

Delta said it plans to grow capacity 17% in the second quarter from a year earlier, though that won’t get the carrier back to 2019 levels as it previously planned.

“We’re intentionally pulling back some of the capacity,” Bastian told CNBC. “We want to make sure we don’t outrun our capabilities.”

He said the airline should be able to get to 2019 capacity levels by the end of the year.

U.S. carriers generally make the bulk of their revenue during the busy spring and summer travel season and Delta’s outlook points to more strength in travel demand, and its strong pricing power. Delta is the first U.S. carrier to report earnings. United Airlines will report on Tuesday, and other carriers will report later in the month.

Here’s how Delta performed in the first quarter, ended March 31, compared with Wall Street expectations based on Refinitiv consensus estimates:

• Adjusted earnings per share: 25 cents vs. 30 cents expected.
• Adjusted revenue: $11.84 billion vs. $11.99 billion expected.

Delta posted a net loss of $363 million, or 57 cents per share, citing, in part, a new, four-year pilot contract that includes 34% raises. That’s still an improvement from the year-ago period, when travel demand was still recovering and the company reported a net loss of $940 million, or $1.48 per share.

Adjusting for one-time items, the company reported net income of $163 million, or 25 cents per share, up from a loss of $748 million, or $1.23 per share, during the first quarter of 2022.

Unit costs, excluding fuel were up 4.7% on the year, partly driven by winter storms that grounded flights.

Delta said its corporate bookings have been recovering, with domestic sales in March 85% back to 2019 levels. It also got a boost in its loyalty program, with its co-branded credit card partnership with American Express contributing $1.7 billion in the last quarter, up 38% from last year, Delta said.

The airline said sales from premium cabins like first class were outpacing revenue from standard coach.