Delta Air Lines Inc (NYSE:DAL) reported first quarter revenue and earnings that exceeded analyst expectations, and indicated continued strength in demand despite rising fuel costs and operational challenges.
For the March quarter, the airline reported adjusted revenue of $14.2 billion, slightly above the $14.11 billion consensus. The figure represents a 9.4% increase compared to the same period a year earlier and falls at the upper end of the company’s previously issued guidance range of 7% to 9% growth.
Adjusted earnings per share came in at $0.64, exceeding expectations of $0.57.
Delta reported adjusted operating income of $652 million and an operating margin of 4.6%. On a GAAP basis, the company posted operating revenue of $15.9 billion, operating income of $501 million, and a pre-tax loss of $214 million.
Fuel expenses totaled $2.591 billion in the quarter, an increase of 8% year-over-year.
The company said demand remained strong across both corporate and leisure travel segments, contributing to better-than-expected revenue performance. It also cited growth in premium offerings as a factor helping offset cost pressures.
Looking ahead to the second quarter, Delta projected revenue growth in the low teens percentage range compared to the prior year. The airline expects an operating margin between 6% and 8% and adjusted earnings per share of $1 to $1.50.
Delta also forecast approximately $1 billion in pre-tax profit for the June quarter, despite anticipating more than a $2 billion increase in fuel expenses. The outlook assumes fuel prices based on the forward curve as of April 2, along with an estimated $300 million benefit from its refinery operations.
The company said its guidance reflects actions taken to manage capacity growth and address higher fuel costs. It also noted that adjusted net debt has fallen below 2019 levels, indicating continued progress in strengthening its balance sheet.
"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,” Delta CEO Ed Bastian said in a statement. “Delta is best positioned to navigate this environment, with a leading brand, strong financial foundation, and the benefit of our refinery.”
Shares of the airline surged more than 12% before Wednesday’s opening bell to about $74.