Delta Air Lines has reaffirmed its fourth-quarter and full-year guidance ahead of a presentation at Morgan Stanley’s Global Consumer and Retail Conference in New York. Despite the record-breaking air travel during the Thanksgiving holiday period, the airline’s guidance remains unchanged since it was first issued in October.
Mixed Reactions from Investors
Investors have had mixed reactions to Delta’s update. While some are relieved that the guidance has not worsened, others are disappointed by the lack of an increase. The stock initially wavered ahead of the market opening but later rose by almost 1%.
Strong Stock Performance
In comparison to its peers, Delta’s stock has performed exceptionally well this year, with a 14.5% increase so far in 2023. The only airline that has seen a greater rise is Hawaiian Airlines parent Hawaiian Holdings, which experienced a 35% boost following a proposed merger with Alaska Air Group.
Consistent with Analyst Expectations
Delta’s profit guidance aligns with analysts’ expectations. The airline expects full-year earnings per share of $6 to $6.25, which falls within the analyst consensus of $6.12, according to FactSet. For the fourth quarter, Delta anticipates earnings per share of $1.05 to $1.30, compared to estimates for $1.15.
Overall, Delta Air Lines’ mid-quarter update provides stability and reassurance for investors, signaling that the airline is maintaining its course amidst ongoing market conditions.
Delta Expects Revenue Growth Despite Challenges
Delta Airlines is optimistic about its future, expecting a significant increase in revenue for the current quarter and the full year. While this guidance initially caused a dip in the stock’s value, it has since rebounded as the airline industry as a whole experiences a recovery.
The Impact of Strong Thanksgiving Demand
Thanksgiving proved to be a pivotal moment for the airline sector. In fact, the Sunday following Thanksgiving set a new record for U.S. aviation, with over 2.9 million passengers passing through security checkpoints nationwide. This surge in demand has contributed to the overall momentum of the industry, with seven out of the top ten busiest days in history occurring within the past six months.
Off-Peak Travel Trends and Potential Offsets
During earnings season, some airlines have noticed a trend of weaker off-peak travel periods alongside stronger peak periods. This could potentially offset the positive impact of peak travel, posing a challenge to the industry’s growth. As a result, it’s important to approach expectations cautiously.
While Delta’s guidance offers promising prospects, investors should remain realistic in their anticipation of airline stock growth. It is still unclear whether a series of guidance hikes will have the desired effect.