Delta Reports Robust Earnings in Tough Quarter for US Airlines

With adjusted earnings of $380 million in the first quarter, up 75% over the prior year, Delta Airlines posted better than expected earnings. Even though average passenger revenue decreased by 2%, the company’s $12.6 billion in revenue was a record.

In the second quarter, Delta expected record revenue, but it also expected lower profit margins. After reaching a record adjusted earnings per share of $2.64 a year ago, it now projects earnings per share of between $2.20 and $2.50. It is still expected to earn $6 to $7 per share for the entire year, which may be more than the $6.25 per share reported for 2023. We anticipate that Delta’s performance will continue to be strong all year long.

Losses expected at other US airlines

Compared to several of its main competitors, whose operations were hampered by Boeing’s issues, Delta has been less impacted. Despite having made orders for several of the aircraft, Delta does not currently have any 737 Max aircraft in its fleet. Compared to around 80% of United Airlines’ fleet and 100% of Southwest Airlines’ aircraft, just about half of its mainline fleet is Boeing-built.

It is expected that the US airline industry will face challenges in the upcoming quarter. All nine major US airlines, regardless of whether they operate Boeing or Airbus aircraft, will likely declare losses at this time. Since labour and fuel expenses are growing and fares are flattening, turning a profit in the traditionally sluggish

Delays in jet deliveries

Delta has not taken a delivery of a Boeing jet since 2019. In July 2022 it placed an order for 100 of the Boeing 737 Max 10 jets, the largest version of the Max. It was originally due to start taking deliveries of those jets next year.

The Federal Aviation Administration has yet to certify that plane to carry passengers, but criticism of Boeing’s safety and the quality controls in the wake of the Alaska Air incident prompted Boeing to withdraw its request for a waiver necessary to get certification this year.