Delta Air Lines (NYSE:DAL) reported first-quarter earnings on Wednesday that exceeded analyst expectations, although its profit forecast for the current quarter came in below market projections.
Delta shares had already rallied ahead of the results, supported by a broader market rebound following news of a U.S.-Iran ceasefire that drove oil prices lower and lifted airline stocks. The stock was up more than 12% by 06:41 ET.
The Atlanta-based carrier posted earnings of $0.64 per share for the first quarter, surpassing the consensus estimate of $0.61. Revenue totaled $14.2 billion, also ahead of the $13.97 billion expected by analysts. Operating income reached $652 million for the quarter, with an operating margin of 4.6%.
Delta also said it will eliminate all previously planned capacity expansion for the second quarter, reducing supply by about 3.5 percentage points from its initial schedule.
“Delta’s results underscore the power of our brand and the durability of our financial foundation. We delivered earnings that were more than 40 percent higher than last year, even with a significant increase in fuel costs and operational disruptions across the industry,” said Ed Bastian, Chief Executive Officer.
“Demand remains strong, and we are taking actions to protect our margins and cash flow. This includes meaningfully reducing capacity growth, with a downward bias until the fuel environment improves, and moving quickly to recapture higher fuel costs.”
For the second quarter, Delta expects earnings per share between $1.00 and $1.50, below the Street’s estimate of $1.70, and forecasts an operating margin in the range of 6% to 8%. The company anticipates total revenue will rise at a low-teens percentage rate compared with the same period last year.
The guidance assumes fuel prices based on the forward curve as of April 2 and incorporates an estimated refinery benefit of about $300 million, leading to a projected all-in fuel cost of roughly $4.30 per gallon for the quarter.