Delta Air Lines’ stock rose 4.7% before market open on Wednesday after the company raised its earnings guidance.
The carrier
DAL,
said it is executing on its three-year recovery plan, with year-one results ahead of expectations. Delta also highlighted robust demand for air travel as the industry recovers from the widespread disruption caused by the COVID-19 pandemic.
The carrier raised its 2022 adjusted EPS guidance to $3.07 to $3.12. Analysts surveyed by FactSet were looking for earnings of $2.88 a share. For 2023, Delta Air Lines Inc. forecast a near doubling of adjusted earnings to $5 to $6 a share.
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Delta also forecast 2023 revenue growth at 15% to 20% compared with 2022 and said it is on track to meet its 2024 earnings target of more than $7 a share. “Demand for air travel remains robust as we exit the year and Delta’s momentum is building,” said Delta CEO Ed Bastian, in a statement.
Delta said it expects to deliver strong topline growth in 2023 and significant operating leverage, boosted by a full restoration of its network and continued improvements in premium and loyalty revenue.
Non-fuel unit costs are expected to decline 5% to 7%, driving Delta’s margin expansion and adjusted earnings growth, the company said. Delta expects to generate more than $2 billion of free cash flow, which it said will enable further debt reduction.
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“2022 is proving to be a pivotal year as we rebuild the world’s best-performing airline,” said Bastian, in the statement.
The company’s robust guidance boosted other airline stocks before market open, with United Airlines Holdings Inc.
UAL,
rising 1.4%, American Airlines Group Inc.
AAL,
gaining 1.3%, and JetBlue Airways Corp.
JBLU,
rising 1.3%.
Delta shares have fallen 14.6% this year, compared with the S&P 500 index’s
SPX,
decline of 15.7% and the U.S Global Jets ETF’s
JETS,
slump of 14.3%.
