Delta Air Lines Shares Surge Post Q1 Results, Says Well-Positioned To Capitalize On Robust Consumer Demand

Delta Air Lines, Inc. DAL reported a first-quarter FY22 adjusted operating revenue decline of 21% from 1Q19 to $8.16 billion. GAAP operating revenue was $9.35 billion, down 11% from 1Q19. Analysts expected the company to report revenues of $8.76 billion.

  • Adjusted EPS loss of $(1.23) topped the consensus of $(1.37).
  • The airline says consumer demand accelerated through the quarter, highlighted by strong spring break performance.    
  • Total passenger revenue was 75% recovered on system capacity that was 83% restored, compared to March 2019 quarter. Domestic passenger revenue was 83% recovered, and international passenger revenue was 54% restored.
  • Total passenger revenue was $6.91 billion, a decline of 25% from 1Q19. Cargo revenue increased by 51% to $289 million compared to 1Q19.
  • Delta recorded an adjusted operating loss of $(793) million, compared to an operating income of $1.03 billion in 1Q9.
  • Total Non-GAAP operating expenses declined by 4% from 1Q19 to $8.95 billion in the quarter.
  • Delta Air Lines generated an operating cash flow of $1.77 billion, compared to $1.94 billion in 1Q19. Adjusted free cash flow was $197 million for the quarter.
  • Delta ended the March quarter with $12.8 billion in liquidity, including $2.9 billion in undrawn revolver capacity.
  • Total revenue per available seat mile increased by 8% from 1Q19 and decreased 5% on an adjusted basis. The passenger load factor was 75% vs. 83% in 1Q19.
  • Compared to 1Q19, CASM-Ex was 15% higher on 17% less capacity.
  • Adjusted fuel price of $2.79 per gallon was up 33% compared to the December quarter of 2021, driven by higher market prices, including a 7¢ refinery contribution.
  • 2Q22 Outlook (compared to Q2 2019): Delta Air Lines expects total revenue recovery to accelerate to 93% - 97%, capital expenditures to be ~$1.2 billion, and adjusted net debt of ~$20 billion.
  • "With a strong rebound in demand as omicron faded, we returned to profitability in March, producing a solid adjusted operating margin of almost 10 percent. As our brand preference and demand momentum grow, we are successfully recapturing higher fuel prices, driving our outlook for a 12 to 14 percent adjusted operating margin and strong free cash flow in the June quarter," commented CEO Ed Bastian.
  • Price Action: DAL shares are trading higher by 4.32% at $40.25 during the premarket session on Wednesday.
  • Photo Via Wikimedia Commons

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