Delta Air Lines Shares Rise After Earnings Beat, Revenue Misses

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Delta Air Lines released its latest earnings report before opening bell this morning, posting adjusted earnings of 77 cents per share on $9.15 billion in revenue. Analysts had been expecting earnings of 75 cents per share and $9.2 billion in revenue. In the same quarter a year ago, the airline reported $9.25 billion in revenue.

Delta’s passenger unit revenues turn positive

GAAP earnings fell to 82 cents per share from $1.21 per share in last year’s first quarter. Passenger revenue declined 1% year over year to $7.69 billion, while cargo revenue fell 1.2% year over year. Passenger capacity fell 0.5% to 57.87 billion ASM, while traffic grew 0.5% to$47.95 billion RPMs.

“March marked the first month of positive passenger unit revenues since November 2015 and we are encouraged by the current fare and demand trends across the network,” Delta President Glen Hauenstein said in a statement. “We expect June quarter passenger unit revenues to increase one to three percent and remain positive throughout the year. However, we will keep our full year capacity growth capped at one percent to support this unit revenue momentum and the company’s return to margin expansion.”

Mainline revenue grew 1% year over year, while regional revenue fell 2.6%. Atlanta revenue fell 4%, while Pacific revenue plunged 13.7% and Latin America revenue grew 6.4%.

Delta Air Lines provides earnings guidance

For the second quarter, the company expects an operating margin of 17% to 19% and fuel prices of $1.68 to $1.73 per gallon. It looks for passenger revenue to increase by 1% to 3% and system capacity to be flat to up 1% year over year.

Delta Air Lines also reported that it expects last week’s severe weather in the Atlanta area to have a negative impact of about $125 million on its June quarter pre-tax income. The airline canceled about 4,000 flights due to the weather.

Shares of Delta Air Lines rose by as much as 2.54% to $46.44 in premarket trading this morning after the first quarter earnings release.

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