Delta Air Lines (DAL) Rallies As Q2 Outlook Looks To Travel Bounce

Trade DAL Stock Your Capital Is At Risk
Ollie Martin
Updated: 13 Apr 2022

Key points:

  • DAL shares rose 6% premarket on improved Q1 and positive Q2 outlook
  • Delta expects revenue to rise ‘double digits' during Q2 compared with 2019
  • Ahead of AAL and UAL earnings, it will be interesting to see ‘bounce-back' similarities

As the first airline to report earnings this year, Delta (NYSE: DAL) pleased investors with an insight into returning travel trends. After two years of dwindling revenue, the company are welcoming back bookings due to a sharp rise in consumer demand, hoping to offset fuel costs that acts as the most prominent tailwind for airlines currently. Following the positive increase in revenue and a reassuring outlook, shares rose around 6% in Wednesday premarket trading. 

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We get a much wider sense of post-covid optimism reflected in Delta’s earnings; with shares of United Airlines and American Airlines both rising in situ. In the earnings report, Delta announces it expects revenue to rise ‘double digits’ during Q2 compared with 2019. The company also illustrated an evident sales recovery, moving quickly towards pre-pandemic numbers.

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Whilst airlines are still often plagued by staffing issues, Delta noted it plans on ramping up its schedule in preparation of the looming, booming travel season; hoping to fly 84% of its 2019 capacity. Delta is trying to balance out rising fuel prices and general inflation with an increase in domestic U.S airfare prices, which points to an interesting trend that, emerging out of the pandemic, travelers are clearly willing to pay more for their long overdue holidays. 

In terms of the Q1 financials, Delta reported an adjusted loss per share of $1.23, slightly short of the $1.27 Street consensus. The airline did however show a clear bounce in revenue, reporting $9.35B compared to $8.92 expected. 

Delta CEO Ed Bastian commented:

“As our brand preference and demand momentum grow, we are successfully recapturing higher fuel prices, driving our outlook for a 12 to 14 percent adjusted operating margin and strong free cash flow in the June quarter”

Investors should look towards upcoming earnings from AAL and UAL for further sentiment correlation towards travel stocks. With all stocks attractively valued based on pre-pandemic prices, DAL looks appealing for 2022. 

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