Delta Leads Airline Resurgence

Delta Airlines announced on Tuesday that it had increased its second-quarter forecast and expects its full-year adjusted earnings to reach $6 per share, which is at the higher end of the estimates it provided last April. This positive outlook is driven by strong travel demand and customers opting for more expensive fare classes.

For the second quarter, Delta now predicts adjusted earnings per share to be between $2.25 and $2.50, surpassing the previous range of $2 to $2.25 per share. The company anticipates that its second-quarter earnings, to be reported next month, could be the highest ever recorded for the April-June period.

The company raised its estimate for free-cash generation this year from $2 billion to $3 billion. Across the board, airlines have experienced robust travel demand, particularly for international trips, while other industries have faced challenges due to inflation and other factors.

However, there are still obstacles to growth, including shortages in air traffic controllers, delays in new aircraft deliveries, and a shortage of new pilots. These factors have contributed to maintaining stable fares.

In addition to the strong demand, airlines are benefiting from a significant decrease in jet-fuel prices, which are currently around 30% lower compared to a year ago.

Delta has also revised its forecast for revenue per available seat mile, which measures an airline's revenue generated per unit of flying capacity. The company now expects this metric to increase by as much as 18% compared to the previous year, surpassing the previously projected growth range of 15% to 17%.