Key Highlights
- Delta’s Q1 adjusted earnings reached 64 cents per share, surpassing the 58-cent Wall Street forecast; revenue hit $14.2 billion, exceeding projections.
- DAL shares climbed approximately 13% during premarket hours, while competitors United, American, and Southwest gained 9–11%.
- The carrier projects Q2 adjusted EPS between $1.00 and $1.50, with a $1.25 midpoint falling short of the $1.41 analyst expectation.
- Jet fuel expenses are projected to increase by over $2 billion in Q2, with prices nearly doubling since late February amid Iran-related tensions.
- The airline scrapped all Q2 capacity expansion plans and implemented higher checked-baggage fees to counter escalating expenses.
Delta Air Lines delivered first-quarter results that exceeded Wall Street’s projections, propelling shares significantly higher during Wednesday’s premarket session. The positive performance coincided with news of a two-week U.S.-Iran ceasefire agreement, providing additional momentum for airline sector stocks.
The carrier’s adjusted profit reached 64 cents per share, outpacing the 57–58 cent consensus forecast. Top-line revenue of $14.2 billion similarly surpassed analyst predictions. Industry peers United, American, and Southwest experienced premarket gains ranging from 9% to 11% following Delta’s announcement.
Looking ahead to the second quarter, management struck a more conservative tone. The airline projected adjusted EPS in the $1.00 to $1.50 range, with the $1.25 midpoint trailing the $1.41 analyst consensus. Leadership opted not to revise full-year projections, pointing to volatility in fuel markets.
Jet fuel pricing has approximately doubled since February’s end, propelled by escalating tensions involving Iran. Delta anticipates paying roughly $4.30 per gallon during Q2, representing an additional $2 billion expense compared to the corresponding 2024 period.
To mitigate financial impact, Delta is deploying multiple strategies. The company’s proprietary oil refinery is projected to generate a $300 million benefit in Q2, substantially higher than the approximately $60 million contributed in Q1 as refining margins expanded. CEO Ed Bastian indicated the airline targets recovering 40–50% of elevated fuel expenses through higher ticket prices during the quarter.
The carrier also implemented increased checked-baggage fees on Tuesday, mirroring actions taken by United and JetBlue. Bastian suggested the increases could become permanent fixtures. “With fuel at these levels, it’s difficult to characterize anything as temporary,” he noted.
Scaling Back Expansion Plans
Delta eliminated all previously planned capacity expansion for the June quarter, representing approximately a 3.5 percentage point reduction from initial projections. Management added that future capacity growth plans now carry a “downward bias until fuel market conditions stabilize.”
Across the industry, U.S. carriers have collectively trimmed domestic capacity growth plans by more than half a percentage point since mid-March. Delta’s refinery operations and robust demand profile position it comparatively better than competitors to weather current headwinds.
Bastian reported that ticket purchases increased at a double-digit year-over-year rate throughout the past month, with positive trends extending into Q2. Affluent travelers specifically have demonstrated resilient spending patterns.
Wall Street Forecasts Show Wide Divergence
Full-year EPS projections among analysts span dramatically from just 15 cents to $7.50, illustrating substantial uncertainty regarding future fuel price trajectories. The consensus estimate hovers around $5.40–$5.52, according to LSEG and FactSet data.
JPMorgan adopted the most pessimistic stance, dramatically reducing its forecast from $7.05 to merely 15 cents. Analyst Jamie Baker stated the firm had “embraced” a full-year jet fuel assumption that pricing increases likely cannot offset—though JPMorgan retained its Overweight rating.
UBS analyst Atul Maheswari maintained a Buy rating with a $5.12 EPS projection, while acknowledging he wouldn’t be surprised if Delta withdraws its full-year guidance altogether.
In January, the carrier had provided full-year adjusted EPS guidance of $6.50 to $7.50. Bastian chose not to revise that range during Wednesday’s announcement.
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