TLDR
- Delta Air Lines upgraded its first-quarter revenue projection to high-single-digit percentage growth from the previous 5–7% range
- American Airlines forecasts Q1 revenue growth exceeding 10% — marking a record quarterly revenue increase for the carrier
- JetBlue upgraded unit revenue expectations to 5–7% growth from approximately flat projections
- Airline equities rebounded Tuesday following optimistic updates, after declining 14–26% since Iran conflict escalation
- Robust passenger demand is enabling airlines to mitigate elevated jet fuel expenses
Shares of Delta Air Lines and American Airlines experienced significant upward movement Tuesday following announcements that both carriers were upgrading their first-quarter revenue projections, despite facing headwinds from escalating jet fuel expenses.
Delta’s stock price advanced approximately 5% during morning market hours. American Airlines climbed roughly 2.7%. JetBlue posted gains of about 0.5%, while Frontier surged 7.5%.
The rally followed investor updates from all three airlines in advance of Tuesday’s JPMorgan Industrials Conference taking place in Washington.
Delta announced revised first-quarter revenue expectations, now projecting high-single-digit percentage growth. This represents an upgrade from the airline’s previous guidance range of 5% to 7%. The carrier maintained its earnings per share outlook at 50 to 90 cents.
During the conference, Delta CEO Ed Bastian remarked: “We’re seeing strength in every market that we look at.” The airline highlighted momentum building in both leisure and business travel segments as March approaches.
American Airlines elevated its first-quarter revenue growth projection to a minimum of 10%, surpassing its earlier 7% to 10% range. The carrier characterized this as the most substantial year-over-year quarterly revenue expansion in company history.
Nevertheless, American acknowledged that accelerating jet fuel price increases would likely push its adjusted loss per share toward the unfavorable end of its projected 10 to 50 cent loss range.
Understanding the Recent Airline Stock Decline
Aviation equities experienced substantial selling pressure following the escalation of conflict involving Iran. Southwest Airlines shares plummeted 26% from the conflict’s onset through Monday’s market close, positioning it among the S&P 500’s poorest performers during that timeframe.
United Airlines declined 21%, American fell 20%, JetBlue dropped 23%, and Delta retreated 14%. These declines persisted despite a modest recovery Monday when crude oil prices moderated.
Investor anxiety centered primarily on concerns that elevated jet fuel expenses would severely compress profit margins. However, Tuesday’s revised guidance indicates passenger demand remains sufficiently robust to offset these cost pressures.
Airlines Demonstrate Pricing Power Amid Cost Inflation
United Airlines CEO Scott Kirby indicated last week that he anticipates a temporary spike in ticket prices before market stabilization, as reported by The Wall Street Journal. He also disclosed that United experienced its highest single-day booking volume ever the previous Monday.
German airline Lufthansa similarly documented a pronounced increase in long-distance travel bookings following the conflict’s beginning.
UBS analyst Atul Maheswari noted that investors remain concentrated on “the degree to which higher fuel costs can realistically be passed along through increased fares.”
JetBlue indicated that vigorous travel demand was compensating for both heightened fuel expenses and operational challenges from two significant winter storm systems during the quarter. The airline revised its unit revenue expectations — measured as revenue per available seat mile — projecting 5% to 7% growth, a substantial improvement from its previous forecast of flat to 0.4% growth.
All five major U.S. carriers participated in presentations at Tuesday’s JPMorgan conference, with some potentially offering updated full-year guidance as well.
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