Delta had a better-than-expected quarter, although headwinds cloud its outlook.
Delta Air Lines (NYSE:DAL) stock performed better than expected in the the first quarter, as the stock price rose about 7% in early trading Wednesday.
Delta saw revenue increase 2% in the March quarter to $14.0 billion, ahead of estimates of $13.9 billion. Net income was $240 million, or 37 cents per share, up from $37 million in the same quarter a year ago.
Adjusted net income rose 3% to $298 million, or 46 cents per share. That topped estimates of 39 cents per share.
In March, Delta lowered its revenue guidance for Q1 to 3% to 4% growth, down from previous projections of 7% to 9% growth. It also lowered its earnings guidance for Q1 to 30 cents to 50 cents per share, from 70 cents to $1 per share.
Delta wound up at the high end of the range, which pleased investors.
“While the first quarter unfolded differently than initially expected, we delivered solid profitability that was flat to prior year and is expected to lead the industry,” said Ed Bastian, Delta’s CEO, said.
Outlook is cloudy
Delta is not confirming its full fiscal year due to the uncertainty surrounding the economy and tariffs.
“Given the lack of economic clarity, it is premature at this time to provide an updated full-year outlook,” Bastian said.
For the fiscal second quarter, Delta expects revenue to be between a range of down 2% to up 2%. Delta President Glen Hauenstein said the airline is seeing continued resilience in premium, loyalty and international customers, offset by softness in domestic and main cabin fares.
Operating margin is pegged at 11% to 14% for Q2. The operating margin would be up from 4.6% in Q1, which was down year-over-year and below estimates. The operating margin gain is due to efforts to reduce expenses amid as it expects reduced capacity due to the economic environment.
The higher projections for operating margin may be why the stock was running about 7% higher on Wednesday.
Growth has “largely stalled”
Further, Delta projects earnings of $1.70 to $2.30 per share, which would be below estimates. Bastian cited the challenges of a slower-growth market.
“With broad economic uncertainty around global trade, growth has largely stalled. In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control,” Bastian said. “This includes reducing planned capacity growth in the second half of the year to flat over last year while actively managing costs and capital expenditures.”
Speaking on CNBC Wednesday morning, Bastian called the Trump Administration’s tariff policies the “wrong approach.”
Deltas had anticipated a strong year in 2025, but that has changed as consumer and corporate confidence in the economy has dropped, and tariffs have clouded the picture further.
But for now, Delta stock was enjoying a good day. But investors should be cautious given the lack of visibility.
