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Delta Air Lines shares crash despite earnings beat

Thursday, April 11, 2024

Today’s headlines

What’s happening: Shares of Delta Air Lines moved lower on Wednesday, after the company released its first-quarter results.

What happened: The airline reported better-than-expected sales and earnings for the first quarter of 2024 on Wednesday.

Delta also issued a strong profit outlook for the current quarter.

How were the results: The Atlanta, Georgia-based company reported a single-digit increase in sales for the first quarter.

  • Operating revenues grew by 8% year-over-year to $13.748 billion.
  • Adjusted operating revenues rose 6% to $12.563 billion, beating the consensus estimate of $12.57 billion.
  • Adjusted earnings jumped 80% to 45 cents per share, exceeding Wall Street expectations of 36 cents per share.

Why it matters: Consumer demand, specifically for premium travel, has been booming, benefiting carriers like Delta Air Lines.

Delta saw an acceleration in corporate travel demand in the March quarter, with managed corporate sales surging 14% year-over-year. Its domestic unit revenues gained 3% to a record high in the quarter.

While total passenger revenues rose 7% year-over-year to $11.13 billion, cargo revenues contracted by 15% to $178 million. Other revenues surged 14% year-over-year to $2.44 billion. Total revenue per available seat mile rose 1% year-over-year, while passenger load factor rose to 83%, from 81% in the year-ago quarter.

The company’s adjusted operating income climbed to $640 million in the first quarter, from $546 million in the year-ago period, while adjusted operating margins widened 50 bps to 5.1%.

Adjusted operating expenses rose by 6% year-over-year to $11.92 billion, while non-fuel costs came in at $9.23 billion.

Delta Air Lines President Glen Hauenstein said that the company had continued to witness strong demand for travel into the June quarter, projecting total revenue growth of 5% to 7%.

For the quarter, the company also projected earnings of $2.20 to $2.50 per share.

How shares responded: Shares of Delta Air Lines rose sharply following the release of quarterly results but ended the day lower by 2.3% at $46.24 on Wednesday. This was likely on profit taking after the stock’s steep climb over the past month. Despite the downturn on Wednesday, the stock has added more than 8% over the past month.

What to watch: Investors will watch consumer demand for spring and summer travel, which is expected to provide a boost to Delta’s overall results ahead.

The markets today

The euro will be in focus today ahead of the European Central Bank’s interest rate decision

Context: The EUR/USD forex pair edged higher this morning, amid some weakness in the US dollar.

Details: Investors assessed the release of inflation data from the US on Wednesday, which showed prices in the country accelerating by 3.5% year-over-year in March, from 3.2% in February. This was also higher than market expectations of a 3.4% rise in prices.

CPI for core goods rose by 3.8% year-over-year, versus market estimates of 3.7%.

The hotter-than-expected inflation data keeps prices well above the US Federal Reserve’s target of 2.0%, lowering speculations of the central bank cutting interest rates in June.

The European Central Bank had kept its interest rates unchanged at historically high levels at its March meeting. The ECB will announce its latest monetary policy decision today. Markets widely expect the central bank to cut rates earlier than the Fed.

Weakness in the US dollar also lent some support to the euro on Thursday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 0.1% to 105.14 during the morning session.

The EUR/USD forex pair rose 0.01% to 1.0746 this morning. The STOXX Europe 600 Index gained 0.15% to close at 506.59 on Wednesday.

What to watch: Investors await the ECB’s interest rate decision today. Investors widely expect the European Central Bank to hold interest rates at 4.5%.

The European Council Meeting and Eurogroup Meeting will also remain in focus today.

Other Markets: US trading indices closed lower on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.09%, 0.95% and 0.87%, respectively.

The news shaping the markets

Ukraine’s President Volodymyr Zelenskyy requested allied nations for air defence systems and fighter jets to be used in the ongoing war with Russia. The news sent the RUB/USD pair lower in forex trading this morning.


China’s producer prices fell by 2.8% year-over-year in March, versus a 2.7% decline in February, exerting pressure on the CNY/USD forex pair.


The Philippines said its trade deficit had shrank to $3.65 billion in February, from $3.88 billion in the year-ago month, which sent the PHP/USD pair higher in forex trading this morning.


UK’s RICS Residential Market Survey house price balance improved to -4% in March, from February’s reading of -10%, lending support to the GBP/USD forex pair.


The EIA said that US crude oil inventories climbed by 5.841 million barrels in the week ended April 5. Although the figure was higher than market estimates of a gain of 2.366 million barrels, the WTI crude oil prices rose this morning.

What else to watch today

Italy’s industrial production, South Africa’s gold production, mining production, industrial production and SACCI business confidence index, Turkey’s gross foreign exchange reserves, Brazil’s retail sales, Mexico’s industrial production, US producer price index, initial jobless claims, continuing jobless claims and natural gas stocks change, Germany’s current account, Russia’s balance of trade and current account, as well as China’s new yuan loans, money supply M2, outstanding yuan loans and total social financing.


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