Delta Air Lines (DAL) reported higher-than-expected second-quarter results on Friday amid robust demand, while the air carrier provided a strong outlook for the ongoing three-month period.
The company posted adjusted earnings of $1.56 a share for the June quarter, down from $2.12 the year before, but ahead of the FactSet-polled consensus of $1.49. Adjusted operating revenue climbed 14% to $17.67 billion on roughly 1% capacity growth, topping the Street's view for $17.55 billion.
"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," Chief Executive Ed Bastian said in a statement.
Fuel price surged 75% to $3.93 per gallon on an adjusted basis, pushing fuel expenses 77% higher annually to $4.41 billion. Crude oil prices soared in the aftermath of the Iran war, but have retreated as the US and Iran agreed to a memorandum of understanding in June.
Adjusted total revenue per available seat mile climbed 12% in the second quarter, with gains across all regions. Passenger revenue rose 13% to $15.61 billion, while cargo revenue jumped 39%.
"We expect momentum to carry into the second half with double-digit margins and a return to earnings growth," Bastian said.
For the third quarter, Delta anticipates adjusted EPS between $2 and $2.50, while the average analyst estimate is for $2.03. Revenue is expected to grow by a mid-teens percentage figure on modest capacity growth, with unit revenue gains "improving sequentially," Chief Commercial Officer Joe Esposito said. The Street is looking for $17.27 billion.
The airline anticipates an all-in fuel price of about $3.15 per gallon in the current quarter.
"Non-fuel unit cost performance is expected to improve modestly from the June quarter with further progression in the December quarter as capacity growth begins to normalize," Chief Financial Officer Erik Snell said in the earnings release.
For 2026, Delta continues to expect adjusted EPS of $6.50 to $7.50, compared with the market's forecast of $6. Free cash flow is still pegged at $3 billion to $4 billion for the year.
"For the full year, we are affirming the guidance we set at the start of the year to grow earnings by 20%, overcoming a multi-billion dollar fuel headwind," according to Bastian. "This reinforces Delta's durability while positioning us to continue our momentum into 2027."
The company announced a 15% increase in its quarterly dividend.
