Delta Air Lines stock jumps on raised guidance, as carrier cites ‘robust’ demand for air travel

Delta Air Lines stock jumps on raised guidance, as carrier cites ‘robust’ demand for air travel

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Delta Air Lines’ stock rose 4.7% before market open on Wednesday after the company raised its earnings guidance.

The carrier

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.

See Now: Delta kicked off airline earnings season with a bang. What does it mean for other carriers?

“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.

rising 1.4%, American Airlines Group Inc.

gaining 1.3%, and JetBlue Airways Corp.

rising 1.3%.

Delta shares have fallen 14.6% this year, compared with the S&P 500 index’s

decline of 15.7% and the U.S Global Jets ETF’s

slump of 14.3%. 

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