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What’s happening: Shares of Delta Air Lines edged lower on Thursday, after the company released results for its first quarter.
What happened: Investors were disappointed with the airline’s quarterly results, despite them coming in-line with its guidance.
Delta Air Lines also issued a strong profit forecast for the current quarter, even after reporting a double-digit decline in revenues from one of its major segments.
How were the results: The Atlanta, Georgia-based company reported a sharp rise in revenues for the January-March quarter, which still missed the consensus estimate.
Why it matters: Airline companies saw strong demand for international travel in the first quarter. However, rising interest rates, high inflation and the banking crisis have added to concerns around consumer spending.
Delta’s total passenger revenues jumped 51% year-over-year to $10.41 billion. However, cargo revenues contracted by 28% year-over-year to $209 million.
The company’s total revenues per available seat mile rose by 15% year-over-year, surging 23% on an adjusted basis. The airline’s passenger load factor came in at 81% in the first quarter, compared to 75% in year-ago period.
Adjusted operating expenses rose by 26% year-over-year to $11.29 billion, with non-fuel costs spiking 24% to $8.5 billion. The airline reported adjusted operating income of $546 million, versus a year-ago loss of $793 million.
Management guided to second-quarter revenue growth of 15% to 17% and earnings between $2.00 and $2.25 per share, higher than the consensus estimates of $1.65 per share, citing strong bookings for summer travel.
The company reiterated its fiscal 2023 forecast of revenue growth of 15% to 20% and earnings between $5 and $6 per share.
How shares responded: Shares of Delta Air Lines fell 1.1% to close at $33.37 on Thursday, following the release of quarterly results. The stock lost another 0.4% in the after-hours trading session. The stock has gained more than 7% over the past six months.
What to watch: Traders will keep an eye on inflation levels and news of further interest rate hikes by the US Federal Reserve. Markets will also monitor the company’s non-fuel costs in the second quarter, which are expected to grow by 1% to 3% year-over-year.
Context: Stocks moved higher on Thursday, following another economic release signalling easing US inflation.
Details: The producer price index fell by 0.5% month-over-month in March, compared to market expectations of a flat reading. The latest decline was the biggest since April 2020. Excluding cost of food and energy, core producer prices also eased by 0.1% month-over-month in March, compared to 0.2% in the previous month.
The recent data confirmed the trend of cooling inflation after March’s consumer price index increased just 0.1%. US consumer prices also increased just 5% on an annual basis, recording the smallest growth in around two years.
The US also reported a rise in the number of persons filing for jobless benefits by 11,000 to 239,000 in the week ending April 8. The figure was also higher than market expectations of 232,000. A weaker labour market puts pressure on the Fed to pause its monetary tightening measures.
Communication services and information technology stocks were among the top performers in the S&P 500 index on Thursday.
The S&P 500 gained 1.33% to reach 4,146.22, its highest settlement since February. The Nasdaq 100 jumped 2.03% to settle at 13,109.39, while the Dow Jones index surged 1.14% to 34,029.69.
What are expectations: Traders await economic reports on retail sales, import prices, export prices and industrial production from the US today. Retail sales in the US, which contracted by 0.4% in February, is expected to decline 0.9% in March. Prices for US imports are projected to decline by 0.2%, while export prices could increase 0.1% in March. Analysts expect industrial production to contract by 0.1% in March, after coming in unchanged in February.
Big banks in the US are scheduled to kick-off the earnings season, with JPMorgan Chase, Wells Fargo and Citigroup set to release their quarterly reports today.
Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.24%, 0.16%, 1.13% and 0.40%, respectively.
Russia’s defence ministry said that the country’s forces were blocking Ukraine’s forces from getting in or out of Bakhmut. Despite continued geopolitical tensions, the safe-haven US dollar index fell this morning.
Singapore’s GDP rose by 0.1% year-over-year in the first quarter, missing market expectations of 0.6% growth, which exerted pressure on the SGD/USD forex pair.
New Zealand’s number of visitor arrivals jumped by 4,998% year-over-year to 266,881 in February, which sent the SGD/USD pair higher in forex trading this morning.
India’s total passenger car sales came in at 292,030 in March, little changed versus the prior month. The news lent support to the INR/USD forex pair.
Colombia’s consumer confidence index fell by 0.7 points to -28.5 in March, versus -27.8 in the earlier month, sending the COP/USD pair slightly lower in forex trading this morning.
Germany’s wholesale prices, India’s wholesale price inflation and foreign exchange reserves, France’s inflation rate, Spain’s inflation rate, Canada’s new motor vehicle sales and manufacturing sales, US manufacturing production, capacity utilization, University of Michigan consumer sentiment, business inventories and Baker Hughes crude oil rigs, Brazil’s business confidence, Indonesia’s total car sales, China’s foreign direct investment, Turkey’s total motor vehicles production, as well as Argentina’s inflation rate.
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