Key Stats for Delta Air Lines Stock
- Price change for Delta Air Lines stock in last 6 months: 23%
- $DAL Stock Price as of Jul. 10: $87
- 52-Week High: $96
- $DAL Stock Price Target: $98
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What Happened?
Delta Air Lines (DAL) stock traded lower on Friday even though the company beat Wall Street’s expectations on both earnings and revenue for Q2.
Delta posted adjusted earnings of $1.56 per share, ahead of the $1.48 per share expected by analysts. Adjusted revenue was $17.67 billion, also above forecasts. Total operating revenue jumped 19% from a year earlier to $19.76 billion.
So why the dip if the numbers looked good?
- Net income fell 25% year-over-year to $1.6 billion, weighed down by much higher fuel costs.
- Delta’s cost per available seat mile, a key measure of how expensive it is to fly each seat, rose 21% during the quarter.
- Revenue per available seat mile grew 17%, meaning costs outpaced the increase in revenue per seat.
- That gap between rising costs and rising prices seems to be part of what’s giving investors pause today, even with the earnings beat.
CEO Ed Bastian remains confident the company can keep passing higher fuel costs on to customers. He told CNBC that Delta was only passing along about 60% of the higher fuel bill to consumers so far, but expects that to climb to nearly 100% this quarter.
Bastian believes this pricing power is sustainable, citing strong demand, more varied seating options, and an airline industry that has become more disciplined about not overexpanding capacity when oil prices eventually fall.
Delta also gave investors a look ahead. The company forecast Q3 earnings between $2.00 and $2.50 per share, above the $2.02 analysts had penciled in, with revenue expected to grow in the mid-teens percentage range compared to last year’s third quarter.
For the full year, Delta reaffirmed its earlier guidance of $6.50 to $7.50 per share.
A few bright spots stood out in the results.
- Premium ticket sales, things like first class, actually outpaced regular coach seating, bringing in $6.92 billion in revenue compared to $6.85 billion from the main cabin.
- Bastian noted that Delta caters heavily to higher-income travelers, which has helped keep demand strong.
- World Cup travel demand also came in stronger than expected, with a boost from visitors entering the U.S.
- Corporate travel picked up too, led by growth in the aerospace and defense, banking, and automotive sectors.
Delta’s fuel refinery in Trainer, Pennsylvania, was another standout, with revenue there surging 83% to $2.09 billion.
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What the Market Is Telling Us About Delta Air Lines Stock
Today’s stock reaction shows investors are looking past the headline earnings beat and focusing more on margin pressure from fuel costs.
Even with Delta Air Lines stock beating expectations, the fact that costs grew faster than revenue per seat suggests some near-term profitability strain, something the market appears to be weighing more heavily than the upside surprise itself.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
