Delta Air Lines, Inc. (DAL) on Q2 2021 Results - Earnings Call Transcript

Operator: Good morning everyone and welcome to the Delta Air Lines June Quarter 2021 Financial Results Conference Call. My name is Katie and I will be your coordinator. At this time, all participants are in a listen-only mode until we conduct a question-and-answer session following the presentation. As a reminder, today's call is being recorded. I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations. Please go ahead. Julie Stewart: Thank you, Katie and good morning everyone. Thanks for joining us for our June quarter 2021 earnings call. Joining us today from Atlanta are our CEO, Ed Bastian; our President, Glen Hauenstein; and our Interim Co-CFO, Gary Chase, and our entire leadership team will be available for Q&A. Ed will open the call with an overview of Delta's performance and strategy, Glen will provide an update on the revenue environment and our brand momentum, and Gary will discuss cost, fleet, and our balance sheet. I would also like to welcome our incoming CFO, Dan Janki who is with us in the room today but will not be participating in Q&A. Similar to last quarter's call, we scheduled today's call for 90 minutes to make sure that we have time for plenty of questions. For analysts, we ask that you please limit yourself to one question and a brief follow-up, so that we can get to as many of you as possible. After the analyst's Q&A, we will move to our media questions, after which, Ed will provide a brief closing statement. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in Delta's SEC filings. We'll also discuss non-GAAP financial measures and all results exclude special items unless otherwise noted. You can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com. And with that, I'll turn the call to Ed. Ed Bastian: Well thank you Julie and good morning everyone. I appreciate you joining us this morning. As we speak we are well into the summer travel season. And if you have been to the airport in recent weeks you have seen first-hand how travelers are reclaiming their lives and returning to the skies. This increase in demand drove a better than expected revenue outcome for us in the June quarter with revenues down 49% versus 2019 resulting in a 6.3 billion total revenue. This was an impressive 76% sequential improvement from the March quarter. More encouragingly momentum is continuing as we exited June with a demand environment that's accelerating. Domestic leisure demand and yields are above June quarter 2019 levels and we see clear signs of business in international demand recovery heading into the fall. Through the crisis we've earned an unprecedented level of brand loyalty and trust, thanks to the world class service, operational reliability and innovation that drives the Delta difference, and our commitment to safety, cleanliness, and wellness is as strong as ever. The people at Delta are our strongest competitive advantage powering our resurgence and running the best operation in the industry. It is because of our people's incredible work that Delta was honored as the number one airline for 2021 by JD Power. I want to thank every member of the Delta family for the professionalism, spirit of service, and warmth you show to our customers every single day. Glen Hauenstein: Thanks Ed and good morning, everyone. 16 months after the start of the pandemic, I'm encouraged by the pace of the recovery and excited about our future. Delta is well positioned with a powerful brand, strong competitive advantages, and a differentiated customer experience, all of which are increasingly driving deeper customer engagement. During the quarter we saw consumer demand for travel return at an accelerated rate as pent up demand drove an increase for air travel. As customers returned to the skies, Delta is their airline of choice given our industry leading service that's provided by the best employees in the industry. This resulted in a more than $2.7 billion improvement in revenue from the March quarter. Compared to 2019, revenues were 49% lower beating our initial guide on 39% less sellable capacity. Bookings in domestic and short haul Latin leisure markets recovered to nearly 90% of 2019 levels, and during the quarter we began experiencing strengthened demand to select European countries as they reopened. Domestic business travel is on an improving trajectory with corporate volumes 40% recovered in the month of June, doubling from the 20% recovery rate in March. Small and medium sized enterprise volumes continued to outperform corporates by 10 points and are now 50% recovered. I'll talk more about the encouraging trends we see in corporate in a few minutes. From April to June passenger unit revenues improved by 25 points, with both load factors and yields strengthening through the quarter. This is a great accomplishment considering that we had the middle seat block in place for the month of April, which, when lifted on May 1st resulted in a 45% increase in sellable capacity with minimal incremental costs. So kudos to the Delta team for managing through this transition period and driving these outstanding results. I also want to congratulate our cargo team for an outstanding quarter with cargo revenues up 35% compared to the June 2019 quarter, despite running a much smaller operation. We are also seeing momentum in daily bookings and net cash sales. Our average net cash came in 20% higher than forecast, doubling relative to the March quarter. Importantly, in the month of June, our average net cash sales are 70% restored to corresponding 2019 levels that's running about 10 points ahead of revenue recovery as customers are making travel plans out into the future. Dan Janki: Thank you Ed and Glen for the warm welcome. Certainly pleased to be here and begin working closely with Ed, Glen, and the entire executive leadership team. To ensure that we continue to establish clear priorities, deliver on our commitment, and build a more resilient valuable Delta there's no doubt it is an interesting time to join. What really drew me to this opportunity at Delta is the unique culture, industry leadership, and growing brand strength with customers. It's a combination like no other in the industry. It's really clear that there's a great deal of talent in the finance organization. I'm humbled and honored to lead this organization forward through this pivotal time. The key guiding principle for me will be open and transparent communication with the financial community. I look forward to speaking to all of you and getting to know the key stakeholders in the coming weeks and months including many of you on the call. Now I'll turn it over to Gary for the financial update. Gary Chase: Thank you Dan and on behalf of the entire finance team welcome to Delta. Good morning everyone on the call and thanks for joining us. Delta people shined and carried our brand to new heights during the crisis. Those efforts combined with the strong demand recovery Glen described and the benefits of operating a simpler and more efficient fleet are enabling us to cross a number of key milestones on our journey to return to and exceed 2019 performance. Let me quickly review the second quarter and then provide color on our second half cost outlook. I will wrap with a discussion of our capital outlook and balance sheet. Starting with highlights from the quarter, we reported an adjusted pretax loss of 881 million, more than $2 billion sequential improvement and generated a solid June month profit despite revenues for the month of June still 40% below 2019. Non-fuel costs rose 6% sequentially on 21% higher capacity as the teams continued to rebuild our network efficiently. Non-fuel CASM was 9% higher than 2019. We realize savings from tax credits and third party rate reductions that were offset by rebuild expenses and maintenance and pilot training and a non-cash expense for employee flight passes awarded to our employees in recognition of winning the JD Power award. Adjusted fuel price per gallon of $2.12 was 11% higher than the first quarter, including a $0.23 per gallon impact from refinery losses. We realized a 7.1% fuel efficiency gain versus the June quarter of 2019 with the majority driven by fleet renewal. Demand momentum field cast sales across the booking curve driving $1.5 billion of growth in our air traffic liability to nearly 7 billion, now 300 million higher than the same period in 2019. With the strength we see in the demand environment we expect our air traffic liability to remain above 2019 levels into next year. Daily cash generation was substantially positive for the full quarter. More importantly we generated nearly 200 million of free cash flow excluding our 1.5 billion pension contribution and 2.5 billion in PSP grant proceeds. We are transitioning now away from daily metrics to focus on regular free cash flow, the best measure of value creation as we turn the corner on profitability and look to restore our financial strength. As we head into the second half we are excited to shift our focus to return into profitability generating cash and restoring and exceeding our pre-COVID results and financial position. With continued recovery and limited cost growth, we expect to be profitable in both the September and December quarters at current fuel prices. Regarding the cost outlook, I'm very happy with the team's performance in the first half as we continue to rebuild the network efficiently. We remain on a path to achieve non-fuel CASM below 2019 levels by fourth quarter though the strength of demand recovery is creating some welcome cost pressure in the form of higher rebuild and selling related expense. We have also experienced inflationary pressure from vendors and our operating teams have accelerated hiring of frontline employees to ensure we maintain excellence in operations in service levels as we rescale. Despite these pressures we will see continued leverage in key areas. For example, we expect an approximate 8% headcount growth through the end of the year on a nearly 15% increase in ASM production. We'll see our fleet utilization rise from 2Q levels approximately 15% below 2019 to approximately 5% in the fourth quarter. Our airports will also see better utilization particularly our coastal hubs as they move from 70% to more than 90% restored. As we accelerate maintenance and training in the higher potential capacity in 2022, rebuild expenses are stepping up in both the third and fourth quarters to 5 to 6 point cost headwind versus 3 to 4 points in the first half. September quarter will see non-fuel costs grow sequentially at roughly the same rate as capacity due to the higher rebuild and revenue related expenses I mentioned. With these factors September quarter non-fuel CASM is expected to be 11% to 14% higher than 2019. We expect to close the gap to 2019 non-fuel CASM in the fourth quarter through continued volume leverage as capacity remains essentially flat from the third to fourth quarters instead of the more normal seasonal decline of approximately 15%. Adjusted fuel price per gallon for the third quarter is expected at 205 to 215. The fuel efficiency for the quarter is expected to remain better than the September quarter 2019 period by approximately 5%. On the capital outlook, we now expect gross CAPEX of approximately 3.2 billion in 2021 up from our original guidance of 2.5 billion driven by our aircraft announcements. Hats off to our fleet and technical supply chain teams for landing these compelling opportunities that meet three key criteria. These transactions are opportunistic and take advantage of attractive economics in the used market. These aircraft types are currently active in our fleet and entirely consistent with our fleet simplification strategy. In addition, these aircraft along with the 321neo options we exercised in April will support the potential for up to 7 points of additional capacity restoration at compelling marginal economics by 2023. We have a lot of additional optionality in our fleet plan to flex capacity up or down at low cost depending on the shape of the recovery. Our 717 and 767 fleets are our largest levers. We're still flying these fleets at scale today and could retire additional units or reactivate parked aircrafts to meet higher demand scenarios. Let me now move to the balance sheet. With improving financial performance and a strong liquidity position, we're using cash to reduce leverage and non-operating expense while rebuilding on encumbered assets and managing our debt maturity profile. During the quarter we pre-paid 450 million in aircraft related debt in addition to normal amortization of 875 million and contributed 1.5 billion to the pension plans. Additionally, we paid cash for all but three aircraft deliveries. Since October, our debt reduction initiatives have totaled 11 billion and freed up 6 billion in collateral. With the additional funding this quarter, we do not foresee the need to make any material pension contributions in the future. By year end, we expect the plans to be fully funded on a Pension Protection Act basis and 90% funded on a GAAP basis. With this level of funding and the plans frozen to new participants, we are now reducing the investment risk of the portfolio to protect our funded status. The great work of our Pension and Treasury teams over the last decade in funding this obligation frees up roughly a billion in annual free cash flow that can be used in the future to further delever or otherwise create value. Adjusted net debt is expected to be approximately 19 billion at the end of the September quarter, modestly increasing from where we ended June as we paid cash for aircraft deliveries. As we turn the corner on profitability and look to the future, we're excited to shift our focus to restoring our business and delivering long term value for our owners. Restoring our financial Foundation remains a top priority as we position for the future, and we look forward to sharing more of our long-term vision with you in December. Let me conclude by congratulating the 75,000 people who make the Delta difference a reality every day. These excellent results are your score card and a reflection of all you do to delight our customers. With that I will turn the call back over to Julie to begin the Q&A. Julie Stewart: Katie, can you please remind the analysts how to queue up for questions? Operator: Thank you. . Our first question will come from Helane Becker with Cowen. Helane Becker: Thanks very much, operator. Hi everybody and thanks for your time. Welcome, Dan. So here's my questions, my first question is I was wondering if you could talk about -- maybe Glen this is for you, how you expect the non-U.S. recovery to look by the different regions over the next say 6 to 12 months, if you can? And then my other question is, I think Glenn, you might have talked a little bit about this in the ATL line. Are you seeing that people are booking further out and I don't know if you can talk to, like, after Labor Day bookings or even holiday bookings, how they're comping to previous levels? Gary Chase: So Helane, first about the entities a little bit. We're seeing a U.S. based demand recovery to the open countries in the Transatlantic, and we expect our loads to move to be close to historical levels running probably in the low to mid-80s by the August, September, October period. Again, the 212f restricts Europeans from coming to this country. So I think we focused on those countries that generally have high U.S. outbound demand. And as we move forward, we will be adding a little bit of capacity but essentially keeping our levels flat where we would normally pull down in the September October time frame and focusing on our European hubs and distributing traffic through them. So I'm pretty optimistic about how the results could play out in the Transatlantic and that's really -- we have 35% to 40% of our travel still missing with the European origin piece not open for sale, and with business really not recovering at the same level as leisure. So pretty optimistic about where we can get to on this leg but there's a lot more to come in the Transatlantic. In Latin, it's really the tale of two markets. One is the closing U.S. point of origin leisure market as well as Mexico business. Both of these are actually exceeding 2019 levels. So short haul Latin is doing quite well and we continue to expect that to be very, very strong as we move into the more traditional leisure season in the late fall. And then the Pacific, which I think Ed has talked in the past, we expect this to be the laggard due to low vaccination rates and continuing outbreaks over and restrictions in the Pacific, and we really don't see any impetus for that to be lifted. Now, I think we're looking at 2022 at the earliest, probably significant recovery in the Pacific. So, Atlantic clearly the furthest along, that's great for us because 65% of our international revenues are in the Transatlantic. So we're excited about what we see in terms of U.S. demand there. Domestically post Labor Day, this is every month that we look from August to September and October, clearly as you move out, you have fewer and fewer bookings. But we have about a third of our September bookings on the books now. And we have as it sits today, and we expect to give some of this back, but we have positive yield in every one of the entities. We have sequential improvements in RASM . So I think we're seeing very strong indications of demand through the post Labor Day period. Of course, those are initial indications. We have a long way to go as we move closer and closer to those departure dates. Helane Becker: Got you, that's very helpful. Thank you. Operator: Thank you. Our next question comes from Sheila Kahyaoglu you with Jeffries. Sheila Kahyaoglu: Good morning, everyone. And thank you for the time. Maybe just on cost related question, on CASM they're expected to remain fairly elevated in Q3. How do you think about the Delta in driving CASM from up 11% to 14% in Q3 versus 2019 levels to flat in Q4? I get about half of that is rebuild cost but maybe what's the bridge and the moving pieces and more broadly, how do you think about cost headwinds and inflationary pressures? Glen Hauenstein: Well, we talked about the major drivers. The key is really leveraging the continued build on the network. And as I was describing in prepared remarks, generally, when we move from the third into the fourth quarter, we have a pretty big reduction in our activity levels. This year we expect that to be relatively flat. That gives us the opportunity to leverage the things that I was describing to get some good incremental leverage on our people, some good incremental leverage on our asset utilization, and it's just a natural outcome of the way the capacity progression is moving. In terms of how we see the bigger pieces, they don't change that much between the third and the fourth quarter. We expect that rebuild expenses will still be at elevated levels in that five to six-point range in both quarters. And one of the things I mentioned on the last call, from a mixed point of view, both the second and third quarters, we've got about a five-point drag from not having anywhere near as much of our long haul international flying, which is just structurally very low CASM, long stage length flying. As we move into the fourth quarter, it's still a headwind. It's not quite as much. It's about three points. So that's the color that I would add. Operator: Thank you. Our next question comes from Conor Cunningham with MKM Partners. Conor Cunningham: Hey, everyone. Thank you. It's great to hear that corporate continues to improve as people return to the office. I do have to ask, like your competitors are now pushing to replicate some of your success that you've had with large corporates. So I was curious if you could talk to the moats that you have built around that franchise and how you anticipate strengthening that segment in the face of potential competition? Ed Bastian: Well, thanks, Connor. It's a very important segment for us, and we have one, as I think, you know, business travel news, Airline of the Year for 10 straight years and we expect to hopefully win it again this fall as well. Our team does a magnificent job of servicing the accounts, providing the technology, the access, the insights to make their job, travel on Delta as easy as possible. And that's supplemented by the great product and service that our people put forward every single day. We're the leading operational airline in the industry. So when you marry up the investments we've been making, particularly in the premium product sector, which our corporates are a main consumer of, with the great service ourselves and commercial team provide and the product and operational integrity of the business, it's a very, very strong moat. We have gained share over the pandemic, meaningful amount of share that we have gained. And the one thing that we have seen is when customers come to Delta, they don't leave. And so we're going to continue to expand upon that. Conor Cunningham: Good to hear, thank you. Operator: Thank you. Our next question comes from Hunter Keay with Wolfe Research. Hunter Keay: Hey, thanks. Good morning. I got two questions for you. The first one is for you, Ed. How do you feel about deleveraging the balance sheet if it hurts your ability to maintain market share? Ed Bastian: Good morning Hunter, I would like to ask you first you're sitting on a rocking chair estimate or no. Hunter Keay: Actually I am. Ed Bastian: I will rock back in my chair as I answer to you. That's good. Deleveraging is important to us. It's something that, first of all, we're the same team that's been here for over the last 15 years. We believe in derisking our balance sheet and our then paying down debt. And we also know that we can do that while also driving a premium product and service offering in the markets that we see as being critical to Delta. We were able to do both those things over the last decade and we'll continue to do that. The level of debt that we took on over the pandemic, candidly, it's a meaningful amount but it's not an overwhelming amount. It was about $8 billion of net debt that we took on during the pandemic. And when you think about, as Gary mentioned, we're basically done funding our pension plan with no more pension contributions required. As I think you also know that we've been averaging over the last several years, close to $3 billion, $2 billion to $3 billion a year in stock repurchases, which clearly we won't be doing in the next two to three years until we get our investment grade metrics back. And another billion on top of that of dividend distributions that we've been making. There's a substantial amount of free cash that is available to us as we reclaim investment grade for Delta. And we'll be sharing our longer term metrics at the Investor Day in December and showing you the path forward. But we can do all this and have plenty of headroom to compete hard and effectively in the marketplace. Hunter Keay: Okay, that's super helpful. Thank you. And then Gary, if you would just clarify, I think you said something about 7% capacity. Are you saying that the current plan for 23 system capacities to be 7% above 2019 but you can take that higher or lower if you need to, am I interpreting that correctly? Gary Chase: No Hunter, that's not what I was saying. What I'm saying is that the fleet actions we've taken give us the potential to add seven points to our capacity profile by 23. But I was also noting the flexibility that we continue to have with some of the flex fleets to go up or down. And I think the teams have positioned us really well to react to what comes at us in terms of the demand environment. Hunter Keay: I see. Okay, thank you, Gary. Thank you Ed. Operator: Thank you. Our next question comes from Jamie Baker with J.P. Morgan. Jamie Baker: Hey, good morning everybody. And just apologies off the bat that my colleague Mark isn’t joining us, but he is on one of your aircraft on a J.P. Morgan sponsored business trip. So I guess we're all better off. Glen, is there a way to tell what portion of summer domestic revenue is driven by reallocated international demand, for example, could you look at SkyMile behavior this summer, identify what portion of those travelers would have historically been in Europe or Asia instead? Glen Hauenstein: I think domestically we see redistribution towards domestic from long haul international. That's a natural occurrence. I think people are ready to get out. The exact quantification I think would be difficult. But we do see that if those leisure destinations are open, there's significant demand for that and that includes the transatlantic where it is open. And if you think about running load factors in the mid to high 80s in the shoulder season, as we head to the end of the summer here just on U.S. origin travel, pretty strong demand trends that we're seeing. So if it is open people would want to get there. Jamie Baker: Yeah, definitely. Thank you. And Gary, just a follow up on the ATL, and I haven't historically obsessed about the air traffic liability until we all sort of had to. Ordinarily, the second or third quarter sequential decline for Delta would be somewhere around $750 million to $800 million. If we continue to get the international reopening particularly for inbound U.S. could we model for something closer to a flat outcome next quarter, so staying in the $6.5 billion range, that sort of thing or would that just be too ambitious, I know you said it would be above last year's levels, but that still leaves a lot of room? Gary Chase: Yeah, Jamie obviously, there's still a lot of uncertainty around that in our thinking right now and that's embedded in how we're thinking about net debt is for a slight decline in that, but we don't expect that you're going to see the normal seasonal pattern as we move through the remainder of this year for all the reasons you just highlighted. Jamie Baker: Okay, perfect. Thank you, everybody. Appreciate it. Operator: Thank you. Our next question comes from Stephen Trent with Citi. Stephen Trent: Hello everybody and thanks very much for taking my question. Just a quick one from me. When we think about in certain pockets in the United States that we are seeing some difficulty with new variants and low vaccination rates, do you see any scenario in which Delta could trim capacity to some of these regions or reinstate on some routes, blocking off middle seats? Glen Hauenstein: Good morning Steve, I don't. As we've been monitoring our bookings and clearly we're mindful of the risks around COVID and the new variants and the continued information that the CDC provides us with, we have not seen any reduction or drop in demand, looking out over the next 60 to 90 days, which is about as far as our crystal ball can go right now. We know our customers are largely vaccinated. Our people are largely vaccinated, we have over 72% of Delta people are vaccinated and the vaccines work. And they are giving people the ability to get back to their lives. So no, we do not anticipate any changes at this time. Stephen Trent: Okay, appreciate that. And thank you. And I'm looking forward to seeing you guys in December 15th, I believe you said and thanks again. Glen Hauenstein: December 16th. Stephen Trent: 16th, excuse me, thank you. Fly down and see us on the 15th if you want. Operator: Thank you. Our next question comes from Myles Walton with UBS. Myles Walton: Thanks. Good morning. Ed, I think at the beginning you mentioned commercial partnerships and creating $1 billion of value from Wheels Up and in CLEAR from zero cost base. I'm curious of your view on the given the news by American as well as United on that front and where that fits in your portfolio of investments and operations over the medium term? Ed Bastian: Thanks Myles. As you can appreciate every one of the proposed manufacturers has been after Delta. We've heard from many of them. We're studying this space and we will continue to get good smartness space. I think it's at a very, very early stage right now and I think a lot of the plans that we see are a bit premature, candidly. But it's not anything that we are unaware of and I guarantee every one of those manufacturers would love to have Delta colors on their plane. So hard to predict timing but we're in the marketplace having lots of conversations. Myles Walton: Okay, and then maybe Gary just a clarification to CASM, next questions. I'm just looking in absolute dollars, it looks like sequentially 3Q. You're looking for the same unit cost, X and fourth quarter the same. And the improvement was really just about comps in 2019. Is that right and then for 2022 how much of these rebuilding costs go away and we get the tail end of those six points? Thanks. Gary Chase: Yeah, I'm not sure I would characterize it exactly that way. But it is about having more scale relative to 2019. So, sequentially I think that what you outlined is roughly accurate and that is what we expect. As we go into 2022, your question was about the sustainability of the rebuild. Myles Walton: Yeah, what goes away from what you're doing? Ed Bastian: Yeah, we definitely expect those to moderate. A lot of that is going to depend candidly on how the demand environment develops. What I would say is, what we've articulated is driving to levels below 19. We're not excluding rebuild expenses. This year they happen to be particularly high. As we get into 2022 we expect those to be more normal, and it's part of the thought process on what we've got to accomplish. Glen Hauenstein: Myles, if I could speak to that for a second, we at Delta our number one task is to safely get our business to back up with the service levels that our customers deserve and expect at Delta. And given the huge surge in demand that we've seen over the last 90 days, the entire industry is challenged with that. That's not a unique Delta position. And we're going to do everything we can to get ahead of it and that includes staffing levels, providing whatever support we need to the service providers and service contractors, training, maintenance, because we realize that this is about protecting our brand and our long term customer base rather than trying to manage costs for an individual quarter. We will hit the cost targets that we mentioned to you. One of the things that we learned a lot about Delta over the pandemic is our ability to manage down labor cost is really unique in this industry. And we have a whole lot more, many more tools and flexibility, I think, than we ever really appreciated. And so we shouldn't think about labor, which is the biggest part -- a big part of the rebuild cost, as a fixed costs, that's not going to stay. So the productivity, the efficiency, the ability to work closely with our people, we'll be in really good shape on the class run next year. And we'll protected our customers experience at the same time and the revenue base, which is the most important. Operator: Thank you. Our next question comes from Savi Syth with Raymond James. Savanthi Syth: Good morning. Competing product is kind of good for the consumer and the industry but one of your competitors plans to grow like first class like room seats by about 10% a year through 2026. And just kind of curious if that level of growth is something we'll see at Delta because it's part of some kind of a structural trend or if that has an implication to Delta's premium kind of revenue leadership or how delta is set up to kind of compete against that? Glen Hauenstein: Sure. Well, I first like to say we're proud that we started the decommoditization process many, many years back and we're well along. And I think we're objectively maybe the furthest along in terms of exploiting that opportunity. There's probably more space out there for other carriers, given the appetite we've seen for these products that have been sustained through the pandemic. So I'm not going to articulate on anybody else's plan. But we think that there's continued growth in our fleet evolution, as we continue to update the airline over the next several years, our percentage of seats that are in the premium cabins continues to increase. And we think given the fact that we are still in the early stages of being able to distribute those products and services, to all of our customers through all of our channels, that there's plenty of opportunity for us to continue to grow that space in the next years, next several years. Savanthi Syth: That makes sense. Thanks, Glen. And maybe a quick follow up for you Glen as well. Just appreciate the color on the domestic corporate demand recovery. I know that's around volumes. Is that RPK and curious what that looks in terms of revenue, I'm guessing volumes have to recover first and then revenue comes back, but I'm just wondering if it's similar or if there's a disconnect there? Glen Hauenstein: Yeah, those are passengers and yields on domestic leisure are up. Yields on domestic corporate are down, but we see trajectory in domestic corporate and we expect that, as you say to continue as we move forward. Savanthi Syth: Makes sense. Thank you. Operator: Thank you. Our next question comes from Mike Linenberg with Deutsche Bank. Mike Linenberg: Hey, good morning. I guess two projection related questions for Glen. On AMEX over the last year, you sort of had backpedaled on when you would get to the 7 billion of contribution, obviously, because of the pandemic. The fact that I guess, the month of June or the June quarter we were 110% and 115%, in the month of June. Glen, can you update us, are we now not on just track but maybe at a pace that we'll get to that AMEX bogey prior than the previous forecast? Glen Hauenstein: Yeah well, I think that's something you'll have to come to our December. See I don't think we're ready to disclose the exact date yet but it suffices to say that we're feeling much better about making up some ground that we lost during the pandemic today than we sat six or nine months ago. Ed Bastian: Yeah, I would -- Mike, this is Ed. Mind if I chime in. I would say that we are thrilled with the relationship with American Express. Our team, their team, I was with Steve Squery last Friday, and I think we had the best performing card in the entire portfolio. Delta, even though we're the highest value that we create, I think we're also the best performing on top of that. So in terms of growth. So it's really been a great, great relationship and that's still without a lot of travel spend that's missing, international and business yet from the card. So we're excited. Mike Linenberg: Great. And then just sort of a second projection question, Glen. I mean, to watch you go from 20%, of corporate volumes to 40 and 60. And yet, even recently I think we had a survey from USA, U.S. travel and even the GBTA talking about U.S. corporate travel, getting back to I don't know, 70% to 85% by 2024, it just feels very conservative. I mean, it seems like we're running well ahead of that. Is that the case, or is there just something different, tell us where you guys are outpacing the industry? Ed Bastian: Mike, this is Ed, let me chime in on that one too. Because I've got the numbers right here in front of me. We've done our own survey, talking to our clients, the biggest the biggest companies in the world, and a very large number of them, and I couldn't make heads or tails out of what the GBTA was speaking to either. Let me give you the most recent survey and this is as of last week updated. 36% of our big corporates expect they're going to return fully to pre COVID levels no later than next year 2022 is 36%. Another 21% says fully back no later than 2023. Interestingly, only 5% of our of our big corporates say that we never returned to pre-COVID levels. 5% that had been 8% in previous surveys, it's now down 5%. While 38% indicate it's still unclear as to what their levels, not that they're not getting back, it's just the level of flying and the timing is still somewhat uncertain, which is understandable. So if you take the 2022-2023, that's 57% no later than 2023. And you assume, say 75% of those unknowns, the 43%, if you actually did 90% back over the course of the next couple of years. And frankly, I think it's going to be even better than that. So this is one of the things that as we have seen there's enormous pent up energy and demand for travel. Also in that survey, 93% of our customers said they're going to increase travel in Q3 over Q2 and many of those by meaningful amounts. So I think the surge is coming. And just as we've seen it on the consumer side, we're getting ready for it on the business side. And once you open businesses, offices, and you get international markets opened, I think it's going to be a very good run over the next 12 to 24 months. Mike Linenberg: Great, great insight gentlemen, thank you. Operator: Thank you. Our next question comes from Duane Pfennigwerth with Evercore ISI. Duane Pfennigwerth: Hey, thanks. Good morning. Ed, you have a good Board in my opinion, lots of experience driving real value in consumer industries, maybe arguably easier consumer industries. Can you give us some insight into debate at the Board level regarding balance sheet improvement as a priority, right here and now, versus investment. Are there differing opinions on investment rate versus balance sheet improvement? And I guess longer term is investing half of your operating cash flow, how we should be thinking about 2022 and beyond or have we kind of moved away from that? Ed Bastian: Well, thanks Duane. We do have a great Board, I agree with that, and there is a lot of good insight we garner from that Board. This is largely the same Board that's been with us over the last decade. It was the Board that was involved in and how we delevered coming out of the financial crisis in 2009. How we've the lead the industry in getting back to investment grade metrics over five years ago while delivering a premium product and service level and expanding internationally at a rate probably faster than anyone, particularly with the investments that we've made. So the Board knows the strategy that we're on, we've talked a lot at the Board level about needing to get our debt down of the balance sheet to get those investment grade metrics back. We'll give you some very specific guideposts on that when we have our capital markets day in December, so you know what to expect from us. And at the same time, we're also investing meaningfully into the business with opportunistic purchase of Airbus 350s and 737-900 that are current vintage, they'll plug and play. And we'll continue to be able to grow the business accordingly. So the strategy actually is not that different from where we've been. And I think it's going to -- we're going to stay very focused to get the investment grade back and growing the business at the same time. Duane Pfennigwerth: Okay, appreciate the thoughts. Operator: Thank you. Our next question comes from Joseph DeNardi with Stifel. Joseph DeNardi: Thanks. Good morning. Ed, in response to Mike's question, you said, I think based on your time with Steve, that the Delta card with Amex is highest value, like what do you mean by that, are you trying to say that it's a very profitable card for Amex as well are their most profitable card? Ed Bastian: No, I don't know if it's the most profitable. I hope we are. You'd have to ask Steve that. But what I can tell you is it creates the highest overall level of spend and growth in the portfolio. And it's been that way for some time and it continues, and we both continue to invest to keep it that way. Joseph DeNardi: Okay, okay. And then Gary, you said the fleet actions would allow you to add seven points to ASM by 2023. So what level of ASM production are you on track to kind of achieve in 2023, I know there's a lot of flexibility, but does the current fleet support 100% of 2019 capacity in 2023 -- where are you now with that? Thank you. Gary Chase: Yeah, Joe we'll talk more about that and what our long term capital needs will be in December with you. What I was pointing out was the portfolio decisions that we've made gives us seven points of additional capacity that we can bring in that timeframe. And, just continue to point out that the team has positioned us with a tremendous amount of flexibility to go either up or down, depending on how we see the demand environment. But we'll have more color on that with a bigger picture about how some of the other components play into it as well. Joseph DeNardi: Okay, thank you. Operator: Thank you. Our next question comes from Chris Stathoulopoulos with Susquehanna International. Chris Stathoulopoulos: Good morning, thanks for taking my question. So your marginal cost per mile in 3Q was just under $0.04 and it's picking up sequentially, significantly. And I realized that, as you said, you're spooling up capacity here but I was wondering at what point whether it's in ASM or revenue where we can expect to see this operating leverage for the costs that you've taken out over the last year or so more clearly show up in results? Normalizing for the change in your marginal cost per mile, from the second to the third quarter as you spool up here, what are kind of a more accurate run rate looks like and that would also assuming corporate does return as you expect by the end of the year? Glen Hauenstein: Chris, on an underlying basis we still have and are experiencing a lot of leverage, even as we move into the third quarter. That will be the case for a good bit here. The guidance we have in the third quarter, we're still operating 28% to 30%, below where we were in 2019. So there are parts of the system where we were under pressure as Ed described, and we're absolutely meeting the needs there. But there are also lots of opportunities for us to drive that leverage. Some of what you're seeing in terms of the moving pieces are at least I think unrelated to that. A big cost pressure as we've moved from the second to the third quarter, at least a couple points which is selling related expense, so obviously thrilled to be seen. And it's just a function of the demand recovery that we're experiencing. Normally when we're in a typical year, we work very hard to not be maintaining aircraft during the peak summer months for obvious reasons, we want them flying and generating contributions. This year we've got a maintenance step up as we move from the second to the third quarter. In fact, I think when you look at third quarter maintenance, it'll be comparable to if not even slightly ahead of where we were in 2019 instead of the down 30ish% that you've been seeing over the last few quarters. So, it's a year with a lot of unique features in terms of how they play out on the cost side, but the fundamental leverage that we've been describing is there. Julie Stewart: And now we'll go to our final analyst questions. Operator: Thank you. Our next question comes from Andrew Didora with Bank of America. Andrew Didora: Great. Good morning, everyone. Just kind of wanted to go back to costs. Obviously, the labor market is very tight right now. And I think your last base pay increase was in October of 2019. To Gary, is there anything in your 3Q or 4Q CASM expectations for a wage increase? And I guess Ed, how are you thinking about the need for one right now? Gary Chase: Thanks Andrew, we don't preannounce what we're doing on our labor strategy and cost. And obviously, our people are working really hard and delivering great value. We're still losing money. We need to get the company stabilized first before we start talking about wage increases. Andrew Didora: Okay. And then last one for Ed, not sure if you're going to have any comments on this. But the last thing of last week, the President issued an executive order and he just called out slot administration as one of the objectives. What do you think this means just given your position in a pretty stock constrained market here in New York, just love to hear if you have any comments on that? Thanks. Ed Bastian: I really don't. Well, we'll study. We'll talk to the administration and Department of Transportation and Secretary and many individuals about it. We have a long history of driving great value for customers. It's expensive to drive great value, and we're making the investments to drive great value. There's no question when you think about the level of service, the quality of service, the reliability, the affordability, everything's moving in the right direction. So we're thrilled to be able to show them the actual results of what we're doing. Julie Stewart: That will wrap up the analysts’ portion of our call. I'll now turn it over to Tim Mapes, our Chief Marketing and Communications Officer to start the media questions. Tim Mapes: Well good morning to all the members of the media. Thank you for your time this morning. We're grateful for that. And Katie, if you wouldn't mind reiterating for the members of the media the rules of asking a question with one follow up, please. Operator: Thank you. . Our first question will come from Mary Schlangenstein with Bloomberg News. Mary Schlangenstein: While planning for the rest of the year if you can talk about the numbers versus that percentage, increase that will be and then also if you'll comment on whether you're having any trouble finding enough people to hire? Ed Bastian: Mary, this is Ed. We missed the first part of your question. Could you repeat that? Mary Schlangenstein: Yes, I wondered if you could say how many employees you're going to add the number versus that percentage increase? Ed Bastian: Over the course of this year, we're in the process of hiring between 4000 and 5000. Mary Schlangenstein: And are you having any trouble finding applicants for those jobs? Ed Bastian: We are not. The Delta brand is a very strong hiring brand. We're having great success. The challenge as I mentioned on the call is the training, the time it takes to get people in position, whether it's on the phones in reservations or in the airports. It takes a few months and the demand has come back in such a fast clip. It's taken us all a little bit of time to catch our breath. But we'll be fully back over the next couple of months and providing -- we've been providing great service, but the service levels that customers should expect and deserve you'll be getting back from Delta in the next couple of months. Mary Schlangenstein: Okay, and have your flight operations been affected at all in terms of lack of flight crews? Ed Bastian: Not at all. Not at all. We've been managing the best completion factor in the industry and it's not even close. Our team is doing a good job. We've been at this for over a year, managing the training queue and the training pipeline, and our pilots and our maintenance team are doing great. Mary Schlangenstein: Thank you very much. Operator: Thank you. Our next question comes from Tracy Rucinski with Reuters. Tracy Rucinski: Hi, good morning. I was wondering if you have any updates on your plans for the trainer refinery, and particularly on the outstanding liability on the biofuel credits? Glen Hauenstein: Tracy, we don't have any -- anything any news. In that regard we continue to operate, train or the team does a very nice job there. We have said in the past that there are opportunities to pull another strategic partner in, we'd be open to that. Relative to the question around RINs, we are fully accrued. So I know there's been some discussion in the press about whether we pulled away from acquiring RINs, we just know the pricing of RINs is not a market based price at the present time. And we're not going to spend good cash chasing a fairly marketplace that isn't transparent. So we've accrued the costs but we have time to decide as we settle those obligations over the next couple of years. Tracy Rucinski: Okay, thank you. Operator: Thank you. Our next question comes from David Koenig with the Associated Press. David Koenig: Oh, hi. Well, Mary asked my question but if I could kind of follow up, I know, Ed, you said that it's too early to raise wages but what about starting pay, are you having to raise starting pay to attract people or do anything else out of the ordinary to find those 4000 to 5000? Ed Bastian: It's interesting Dave, we've looked at potentially hiring bonuses and other incentives. And largely we haven't needed to resort to that. People look at the Delta brand as a place they want to be long term and they see this as an opportunity to get inside Delta. So no, we haven't had to make any changes to scale. We always watch it, we're very competitive in the market, we pay well, our people, we take great care of them. But no, we haven't had to adjust our salary scales in any in any meaningful way. David Koenig: Okay, thanks. Operator: Thank you. Our next question comes from Dawn Gilbertson with USA Today. Dawn Gilbertson: Hi, good morning. My questions are about the customer service wait times. They still are as long as six hours at least as recently as yesterday. So I'm wondering from a travelers perspective, is there any end in sight? I've also noticed that you guys have temporarily suspended help through Twitter DM which is a frequent recommendation I and other travel reporters give. So is there any end in sight, and what's your best advice for people to reaching Delta, especially with last minute travel questions? Thank you. Well, Ed Bastian: Thanks. Thanks Dawn, this is Ed we are hiring a couple 1000 people into reservations. We've already hired at least half that number. We've got more to go every single week with more and more people are getting on the phones. We've reached out to many of the people at reservations who have retired as we had separation packages and voluntary departure packages over the last year. We have a fair number of them that returned, they are on the phones. We have people working from home. It's not a question of not providing the staff and we are doing everything we can the volumes are beyond anything we've ever seen there beyond the high point of 2019. And the handling times are substantially longer as people have more questions, as travel has changed, it is the first time back., So we're incredibly sensitive to it. The number you mentioned is not the average number at all. Yes, there are still rare occurrences of that. We have the callback features in place. We manage every one of the Qs, whether it's the General SkyMiles Q, the premium Qs, the non member Qs. And we're all at the longest the average we're seeing is in the one hour time frame. Which, by the -- wait way, which is, by the way too long, and by September we expect to get that back down to normal levels. Dawn Gilbertson: Could somebody come in or get back to me on the Twitter DM, because you guys appear to be the only one of the major Airlines that's temporarily not responding via DM? Ed Bastian: Yeah, I'm not sure about that. We'll get back to you. Dawn Gilbertson: Thank you. Ed Bastian: And by the way, people email me every day, every hour. That's a good way. Somebody needs help just send me a note, I will take care of it. Operator: Thank you. Our next question comes from Leslie Joseph with CNBC. Leslie Joseph: Hi, good morning. Thanks for taking my question. For the employees that are coming in now that you're hiring, are they on average at lower wages than some of the people that left with a lot of senior people took retirement? And then also for the 20% of employees that are not vaccinated or there are certain work groups that's concentrated in, are you doing anything to increase vaccination rates across the company? Ed Bastian: Your first question, Leslie, yes the starting rates of people join the company are clearly lower than the then the rates that people retired at as they left the company after 25, 30, 40 years of service. So we are getting a juniority benefit in the scale. We're giving a lot of people, a lot of our particularly our young managers who are having opportunities to take on more responsibility and growth in their careers. And that's all very, very healthy. Your question around vaccinations the 28%, could you repeat that? Leslie Joseph: What are you doing to increase that vaccination rate across the company? And do you see that it's concentrated in any one work group or geography or the best access information? Ed Bastian: Listen 72% candidly we're proud of it. It beats any national average by a meaningful amount. We do have pockets within the company in certain regions and certain demographics that are below 72% and we are doing everything we can to continue to encourage and incent. We provided $1 million last month in total awards to vaccinated employees. They are 40 different drawings of $25,000 a piece. I think we have one more drawing today that we have of anyone that's just been newly vaccinated within the last month. To win $25,000 we've given away free travel to employees through drawings that can get vaccinated. And we continue to describe the risks to individuals if they're not vaccinated from the variance. So I don't know a company is doing more to get its team vaccinated than Delta. Leslie Joseph: Thank you. Operator: Thank you. Our next question comes from Alison Sider with Wall Street Journal. Alison Sider: Hi. Thank you so much. I'm just curious what you are hearing about the math command on planes if you think it will be listed in September. And I guess how you feel about that if you are hoping it will be listed earlier or if you like to get extended? Ed Bastian: Hi, Ali. I don't know what's going to happen. It's up to the FEA. It's not really up to the Airlines to make that decision. We will be in conversations clearly with the FEA. I think it's important that medical experts make those decisions, not airline professionals as we've learned through the pandemic. They're the ones that have all the insight and the information, and keeping people safe. I appreciate people not wanting to wear the mask. I don't like wearing the mask when I'm on board either, but it's something that we need to do to keep each other safe. And I think the other question about what's going to happen in September. It really depends on where we are in the recovery phase. If the variants are continuing, I think people are going to be a little more careful about lifting the masks. If international borders are not yet opened, I'm not sure lifting the mask is going to help opening up those borders. So there's a lot that goes into that and I think as many pros to take the mask requirement as there are to keeping it on at the present time. Alison Sider: Thanks. Operator: Thank you. Our next question comes from . Unidentified Analyst : Hi, good morning. Thanks for taking my call or my question. I had a question about the federal payroll support and whether based on the arguments Delta management made last year, if you still believe that the support was facilitate faster recovery, protecting jobs? And the second part of my question is what happens after October first weather and what burning off the expiration of support will mean or burning off the expiration of support will mean for Delta's earnings? Ed Bastian: Well, I think it's without debate that the federal support was critical to keeping our industry afloat and keeping our employees employed and being in position for the recovery. As we've talked on this call, one of the biggest challenges we're having now is getting everything fully stood up, even though we've kept all of our employees. So you can imagine if we had to actually let many people go and abandon those individuals, the challenges we'd be facing in our country of getting travel moving again. So I think it's been an incredible success. One can debate the length of the PSP2 and PSP3. I see no interest in going beyond what we have at the present time with PSP3, and we expect to be profitable in Q3 and beyond without any PSP support. Yes. Unidentified Analyst : Thank you. Tim Mapes: Katie we have time for one final question, please. Operator: Thank you. Our final question comes from David Slotnick with TPG. David Slotnick: Hi, good morning. Thanks for taking my question. I'm wondering if you can talk a little bit about what you've seen in the last few weeks with unruly passengers. Has there been any upward or downward trending in incidents of that, and do you have any thoughts on just what's been causing this sort of search this spring and early summer? Ed Bastian: You know, David, we haven't seen any meaningful shifts. It's been something we've been dealing with over the course of the Pandemic. Some people want to related to having to wear masks. I'm sure that's a piece of it. I don't know that's the main piece. I think the bigger challenge is that we've got a lot of individuals that have been impacted. Their emotional wellbeing have been impacted during the pandemic. It has people are coming back out into society. You see challenges in all walks of life, not just our industry. You see it happening in other places as well in society. So obviously, social media amplifies that and puts it on a stage that's not our experience. That's not our normal experience by any means. Their crews are trained and they're incredibly professional in managing the conditions when we have someone who doesn't want to follow instructions of the crew. And unfortunately, something we've become good at. And I look forward to the return of our business and patterns of normalcy so that we can start to manage our business without having to worry about these effects. Glen Hauenstein: Patterns of normalcy, it's a good way to put it. Thank you. Tim Mapes: Thank you for the question, David. And thank you to all the members of the media for your time this morning. As we wrap up, we'll turn it over to Ed for final comments. Ed Bastian: Well, I thank you all for joining us. It's been an hour and a half. We spent a fair bit of time with you, but hopefully you've learned a lot as to why we're encouraged. And as we power our plan for the post pandemic future, why that I'm and our team is as optimistic as ever for the journey that we're on. U.S. Travelers are returning and it's really a tribute to the incredible work of our scientific community in developing effective vaccines. And that's going to be key to opening the world or return to profitability in the month of June is a major milestone. Solid profitability close to 10% speaks to the strength of our brand and the great work of our team worldwide. As we move past this inflection point from crisis into restoration, the people of Delta will be front and center, serving our customers and our communities. Our mission of connecting the people of the globe is a noble one. It's an important one. It's got great purpose and the social good that's generated by travel will be essential in the months and years ahead as our world heals. So I thank you all for your time today for joining us. And one more time, I want to say a special thanks to all the Delta people worldwide for their great work over the course of this last 16 months in getting our business to a point where we're looking to bright skies ahead. So thank you all. Operator: This concludes today's conference. Thank you for your participation.
DAL Ratings Summary
DAL Quant Ranking
Related Analysis

Delta Air Lines (NYSE: DAL) Quarterly Earnings Preview

  • Delta Air Lines is expected to report an EPS of $1.92 and revenue of $16.16 billion for the upcoming quarter.
  • The company has a history of exceeding earnings expectations, with an average earnings surprise of 10.06% over the past two quarters.
  • Key financial ratios such as the P/E ratio of 8.82 and earnings yield of 11.34% highlight Delta's market valuation and financial efficiency.

Delta Air Lines (NYSE: DAL) is gearing up to unveil its quarterly earnings on July 10, 2025. Analysts are projecting an earnings per share (EPS) of $1.92 and revenue estimates stand at around $16.16 billion. As a leading entity in the airline sector, Delta is renowned for its steady performance and knack for surpassing earnings forecasts.

Delta boasts a robust track record of outperforming earnings projections, with an average earnings surprise of 10.06% over the preceding two quarters. In its most recent quarter, Delta was anticipated to post earnings of $0.46 per share but reported $0.4 per share, culminating in a 15% surprise. The quarter before that, the consensus estimate was $1.76 per share, and Delta outdid this with $1.85 per share, achieving a 5.11% surprise.

Examining Delta's financial indicators sheds light on its market valuation and operational performance. The company's price-to-earnings (P/E) ratio stands at approximately 8.82, illustrating the market's valuation of its earnings. Its price-to-sales ratio is pegged at about 0.53, indicating a relatively modest market valuation in comparison to its revenue. Furthermore, the enterprise value to sales ratio is around 0.83, reflecting the company's overall valuation against its sales figures.

Delta's financial efficiency is underscored by its enterprise value to operating cash flow ratio of roughly 6.42. This metric offers insights into the company's cash flow efficiency. With an earnings yield of 11.34%, Delta presents a significant return on its earnings relative to its share price. Nonetheless, the debt-to-equity ratio of about 1.44 signals the company's leverage level, and the current ratio of approximately 0.38 may indicate potential liquidity challenges.

Delta is set to host a live conference call and webcast to discuss its financial outcomes for the June quarter of 2025. This event is slated for 10 a.m. ET on July 10, 2025. Stakeholders can access the live webcast at ir.delta.com, with an online replay available shortly after the event's conclusion.

Delta Air Lines Announces Dividend Increase and Maintains Strong Market Presence

  • Delta Air Lines (NYSE:DAL) raises its quarterly dividend by 25% to $0.1875 per share.
  • Bernstein maintains an "Outperform" rating on Delta, with a price target adjustment from $61 to $60, indicating a potential increase of approximately 26.16%.
  • Delta's operational excellence and commitment to shareholder value are underscored by its market capitalization of approximately $30.79 billion and a trading volume of 3.23 million shares.

Delta Air Lines (NYSE:DAL) has announced a 25% increase in its quarterly dividend, raising it to $0.1875 per share. This dividend will be distributed to shareholders on record by July 31, 2025, with payment scheduled for August 21, 2025. Delta is renowned for its exceptional service and innovation, operating up to 5,000 flights daily and connecting over 290 destinations across six continents.

In 2024, Delta served over 200 million customers and was recognized by J.D. Power for leading in First/Business and Premium Economy Passenger Satisfaction. The airline was also acknowledged as North America's most on-time airline and received the Platinum Award for Operational Excellence from Cirium. Delta remains committed to providing a connected, personalized, and enjoyable travel experience.

On June 18, 2025, Bernstein maintained its "Outperform" grade for Delta, with the stock priced at $47.56. Bernstein adjusted the price target for Delta, lowering it from $61 to $60. Despite this adjustment, the new target still suggests a potential price increase of approximately 26.16% from the current price.

Delta's stock is currently trading at $47.16 on the NYSE, experiencing a slight decrease of 0.85%, with a change of $0.41. The stock has fluctuated between a low of $47.13 and a high of $48.19 today. Over the past year, it reached a high of $69.98 and a low of $34.74, with a market capitalization of approximately $30.79 billion.

Delta's trading volume stands at 3.23 million shares. The company's strong market presence and operational excellence continue to attract investor interest, as highlighted by Bernstein's positive outlook. Delta's commitment to enhancing shareholder value through dividend increases further solidifies its position in the competitive airline industry.

Delta Air Lines' Financial Performance and Market Position

  • Earnings Per Share (EPS) of $0.46, surpassing estimates and indicating operational efficiency.
  • Revenue reached approximately $12.98 billion, slightly above expectations, showcasing strong demand and cost management.
  • Despite solid financials, concerns over liquidity and a decline in stock price highlight areas for investor caution.

Delta Air Lines, trading as NYSE:DAL, is a major American airline headquartered in Atlanta, Georgia. It operates an extensive domestic and international network, serving over 300 destinations in more than 50 countries. Delta competes with other major airlines like American Airlines and United Airlines. The company is known for its focus on customer service and operational efficiency.

On April 9, 2025, Delta reported earnings per share (EPS) of $0.46, surpassing the estimated $0.38. This performance also exceeded the Zacks Consensus Estimate of $0.40 per share, marking a slight increase from the $0.45 per share reported in the same quarter last year. Despite this, the stock price declined by 3.77%, as highlighted by the company's failure to meet its own guidance of $0.70 to $1.00 per share.

Delta's revenue for the quarter was approximately $12.98 billion, slightly above the estimated $12.97 billion. The company attributes its solid revenue and strong cost performance to its profitability, which remains comparable to the previous year. Delta is projecting an operating margin of 11% to 14% for the June quarter, with expected EPS ranging from $1.70 to $2.30.

The airline's financial metrics reveal a relatively low valuation, with a price-to-earnings (P/E) ratio of 6.79 and a price-to-sales ratio of 0.38. This suggests that investors are paying 38 cents for every dollar of sales. Delta's enterprise value to sales ratio is 0.60, and its enterprise value to operating cash flow ratio is 4.62, indicating a strong ability to cover its enterprise value with operating cash flow.

Delta's debt-to-equity ratio is 1.11, reflecting moderate debt usage. However, the current ratio of 0.37 may indicate potential liquidity concerns in meeting short-term obligations. Despite these challenges, Delta offers an earnings yield of 14.72%, providing a substantial return on investment relative to its share price.

Delta Air Lines' Financial Performance and Market Position

  • Earnings Per Share (EPS) of $0.46, surpassing estimates and indicating operational efficiency.
  • Revenue reached approximately $12.98 billion, slightly above expectations, showcasing strong demand and cost management.
  • Despite solid financials, concerns over liquidity and a decline in stock price highlight areas for investor caution.

Delta Air Lines, trading as NYSE:DAL, is a major American airline headquartered in Atlanta, Georgia. It operates an extensive domestic and international network, serving over 300 destinations in more than 50 countries. Delta competes with other major airlines like American Airlines and United Airlines. The company is known for its focus on customer service and operational efficiency.

On April 9, 2025, Delta reported earnings per share (EPS) of $0.46, surpassing the estimated $0.38. This performance also exceeded the Zacks Consensus Estimate of $0.40 per share, marking a slight increase from the $0.45 per share reported in the same quarter last year. Despite this, the stock price declined by 3.77%, as highlighted by the company's failure to meet its own guidance of $0.70 to $1.00 per share.

Delta's revenue for the quarter was approximately $12.98 billion, slightly above the estimated $12.97 billion. The company attributes its solid revenue and strong cost performance to its profitability, which remains comparable to the previous year. Delta is projecting an operating margin of 11% to 14% for the June quarter, with expected EPS ranging from $1.70 to $2.30.

The airline's financial metrics reveal a relatively low valuation, with a price-to-earnings (P/E) ratio of 6.79 and a price-to-sales ratio of 0.38. This suggests that investors are paying 38 cents for every dollar of sales. Delta's enterprise value to sales ratio is 0.60, and its enterprise value to operating cash flow ratio is 4.62, indicating a strong ability to cover its enterprise value with operating cash flow.

Delta's debt-to-equity ratio is 1.11, reflecting moderate debt usage. However, the current ratio of 0.37 may indicate potential liquidity concerns in meeting short-term obligations. Despite these challenges, Delta offers an earnings yield of 14.72%, providing a substantial return on investment relative to its share price.

Delta Air Lines, Inc. (NYSE:DAL) Stock Analysis: A Comprehensive Overview

  • Delta Air Lines, Inc. (NYSE:DAL) has seen a decline in analysts' average price target over the last quarter, from $67.50 to $62.67, amid concerns of a potential recession impacting consumer demand.
  • The airline's stock has declined approximately 38.68% year-to-date, yet shares are considered undervalued due to strong fundamentals and ongoing travel demand.
  • Despite short-term challenges, Delta's robust fundamentals and strong travel demand present a compelling buy opportunity, with factors like fuel prices, travel demand, and economic conditions being key considerations for investors.

Delta Air Lines, Inc. (NYSE:DAL) is a major American airline headquartered in Atlanta, Georgia. It operates an extensive domestic and international network, serving over 300 destinations in more than 50 countries. Delta is one of the largest airlines in the world, competing with other major carriers like American Airlines and United Airlines. The company is known for its strong operational performance and customer service.

In the past month, Delta's average price target was $62.67, reflecting a moderately optimistic short-term outlook from analysts. However, UBS analyst Myles Walton has set a lower price target of $48, indicating a more cautious stance. This discrepancy may be due to concerns about a potential recession and its impact on consumer demand, as highlighted by recent market trends.

Three months ago, the average price target for Delta was $67.50, showing a decline in analysts' expectations over the last quarter. This drop aligns with the airline's year-to-date stock decline of approximately 38.68%. Despite this, Delta's shares are considered undervalued due to strong fundamentals and ongoing travel demand, as noted by TSA data.

A year ago, the average price target was $64.44, slightly higher than the current target. This suggests tempered expectations from analysts over the year. Factors such as reduced high-end travel and economic uncertainty have contributed to this sentiment. However, the decline in fuel prices is expected to improve profit margins, supporting Delta's potential for earnings growth.

Overall, Delta's consensus price target has seen a slight decline over the past year, with a more noticeable drop in the last quarter. Investors should consider factors like fuel prices, travel demand, and economic conditions when evaluating the stock. Despite short-term challenges, Delta's robust fundamentals and strong travel demand present a compelling buy opportunity.

Delta Air Lines, Inc. (NYSE:DAL) Stock Analysis: A Comprehensive Overview

  • Delta Air Lines, Inc. (NYSE:DAL) has seen a decline in analysts' average price target over the last quarter, from $67.50 to $62.67, amid concerns of a potential recession impacting consumer demand.
  • The airline's stock has declined approximately 38.68% year-to-date, yet shares are considered undervalued due to strong fundamentals and ongoing travel demand.
  • Despite short-term challenges, Delta's robust fundamentals and strong travel demand present a compelling buy opportunity, with factors like fuel prices, travel demand, and economic conditions being key considerations for investors.

Delta Air Lines, Inc. (NYSE:DAL) is a major American airline headquartered in Atlanta, Georgia. It operates an extensive domestic and international network, serving over 300 destinations in more than 50 countries. Delta is one of the largest airlines in the world, competing with other major carriers like American Airlines and United Airlines. The company is known for its strong operational performance and customer service.

In the past month, Delta's average price target was $62.67, reflecting a moderately optimistic short-term outlook from analysts. However, UBS analyst Myles Walton has set a lower price target of $48, indicating a more cautious stance. This discrepancy may be due to concerns about a potential recession and its impact on consumer demand, as highlighted by recent market trends.

Three months ago, the average price target for Delta was $67.50, showing a decline in analysts' expectations over the last quarter. This drop aligns with the airline's year-to-date stock decline of approximately 38.68%. Despite this, Delta's shares are considered undervalued due to strong fundamentals and ongoing travel demand, as noted by TSA data.

A year ago, the average price target was $64.44, slightly higher than the current target. This suggests tempered expectations from analysts over the year. Factors such as reduced high-end travel and economic uncertainty have contributed to this sentiment. However, the decline in fuel prices is expected to improve profit margins, supporting Delta's potential for earnings growth.

Overall, Delta's consensus price target has seen a slight decline over the past year, with a more noticeable drop in the last quarter. Investors should consider factors like fuel prices, travel demand, and economic conditions when evaluating the stock. Despite short-term challenges, Delta's robust fundamentals and strong travel demand present a compelling buy opportunity.

Delta Air Lines' Strong Q4 Performance Highlights

  • Delta Air Lines (NYSE:DAL) reported earnings per share of $1.85, beating estimates and showcasing strong financial health.
  • The company's revenue of approximately $15.56 billion exceeded expectations, driven by a significant increase in cargo revenues.
  • Delta's financial metrics, including a P/E ratio of 11.52 and a debt-to-equity ratio of 1.11, reflect its market valuation and financial stability.

Delta Air Lines (NYSE:DAL) is a major American airline, known for its extensive domestic and international flight network. It competes with other major airlines like American Airlines and United Airlines. On January 10, 2025, Delta reported earnings per share of $1.85, surpassing the estimated $1.74, and actual revenue of approximately $15.56 billion, exceeding the estimated $14.19 billion.

During the Q4 2024 earnings conference call, led by CEO Ed Bastian and other key executives, Delta's financial performance was discussed in detail. The call, attended by analysts from Goldman Sachs, Barclays, and JPMorgan, highlighted Delta's strong earnings amid a 3% rise in crude oil prices. Despite this, U.S. stocks, including the Nasdaq Composite, experienced a downturn.

Delta's impressive financial performance in Q4 2024 was partly driven by a 32% year-over-year increase in cargo revenues. This growth contributed to the company's earnings surpassing estimates, showcasing Delta's ability to capitalize on its cargo operations. The strong performance provides a positive outlook for the company moving forward.

Delta's financial metrics offer insights into its market valuation and financial health. With a price-to-earnings (P/E) ratio of approximately 11.52, investors are willing to pay $11.52 for each dollar of earnings. The price-to-sales ratio of about 0.68 indicates that investors pay 68 cents for every dollar of sales, while the enterprise value to sales ratio of 0.91 reflects the company's valuation relative to its revenue.

The company's enterprise value to operating cash flow ratio is approximately 6.97, indicating its cash flow generation relative to its valuation. An earnings yield of about 8.68% provides a perspective on the return on investment. Delta's debt-to-equity ratio of approximately 1.11 shows the proportion of debt used to finance its assets, and a current ratio of around 0.37 highlights its ability to cover short-term liabilities with short-term assets.