The carrier posted record adjusted revenue of $17.7 billion in the second quarter and projected third-quarter earnings above analyst estimates
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Delta Air Lines reported second-quarter adjusted earnings of $1.56 per share on adjusted revenue of $17.7 billion on Friday, topping Wall Street estimates and reaffirming its full-year profit guidance despite absorbing what it called the highest quarterly fuel expense in its history.
Wall Street had penciled in adjusted earnings of $1.48 per share and revenue of $17.53 billion for the quarter, per CNBC. The quarter's revenue gain came almost entirely from higher fares and mix rather than expansion, with capacity up only about 1% while adjusted revenue climbed roughly 14%, the company said.
CEO Ed Bastian attributed the results to broad demand strength across customer segments. "We delivered $1.4 billion in pre-tax profit while absorbing the highest quarterly fuel expense in our history, reflecting broad demand strength, growing brand preference and momentum across our diversified revenue base," Bastian said in a statement.
At $6.92 billion, premium ticket sales outpaced the main cabin for the quarter, with main cabin revenue coming in at $6.85 billion; the two segments grew 17% and 8%, respectively, from a year ago. Loyalty and related revenue climbed 19%, with American Express $AXP remuneration of $2.4 billion rising 16% from a year earlier. Among corporate customers, the aerospace and defense, banking, and automotive sectors drove the strongest gains, the company said.
Overall net income fell 25% to $1.6 billion, or $2.44 per share on a GAAP basis, as fuel costs rose sharply. Delta paid an average of $3.93 per gallon for fuel on an adjusted basis in the quarter, up 75% from $2.25 a year earlier. CFO Erik Snell noted that fare increases covered roughly 60% of the jump in fuel costs during the period, a pace of recovery that outstripped the company's historical experience, according to Reuters.
Looking to the third quarter, Delta guided for an operating margin between 11% and 13% on revenue growth in the mid-teens, with adjusted earnings expected to land between $2.00 and $2.50 per share. Analysts had forecast third-quarter earnings of $2.02 per share, according to CNBC. Delta's third-quarter projections are built on a fuel cost assumption of around $3.15 per gallon.
For the full year, the carrier stood behind its January forecast of $6.50 to $7.50 per share in adjusted earnings, a guidance range it had omitted from its April first-quarter release, along with a free cash flow target of $3 billion to $4 billion. The company also announced a 15% increase to its dividend payment beginning in the third quarter and said it reduced adjusted net debt by $709 million from year-end 2025 to $13.6 billion.
Delta had introduced a lower-priced entry-level fare for its Delta One business class cabin earlier this week, extending its cabin segmentation strategy to premium products after bringing tiered pricing to its main and comfort cabins.
Delta stock was up about 2% in premarket trading Friday.
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