Delta stock increased 3.7% before Friday’s market trading. It increased 3.9% to close at 30.37 on Thursday. Early on Friday, American Airlines (AAL) increased by 2% while United Airlines (UAL) increased by 2.3%.
The airline sector is optimistic ahead of additional earnings next week after Delta Air Lines (NYSE:DAL) posted record revenue and optimistic projections despite missing on Thursday’s earnings expectations.
AAL gained 2.8% to close at 13.05. Alaska Air Group (ALK) increased 1.7% to 41.90 and United Airlines rose 3.4% to 35.40.
Helane Becker, an analyst with Cowen (COWN), upgraded Delta (NYSE:DAL) to Outperform from Market Perform on Friday and kept a 54 price target. Additionally, Becker increased Delta’s projected earnings per share for 2022 to $2.84 and for 2023 to $7.00.
According to Becker’s Friday report, “looking at the 2023 consensus, we feel it is likely to rise up since revenue is typically rising over projections.”
Ravi Shanker, an analyst at Morgan Stanley (MS), was also on a Friday morning flight with Delta.
According to Shanker,they remain bullish on the airline sector as a whole, and DAL is one of our preferred ways to play the upside.
There are no indications of demand gaps, said to Shanker, who added that Delta’s Q4 projection “brings the swagger back.” The analyst continued by saying that Delta’s results and outlook strengthened the idea that the aviation sector is recovering from the Covid epidemic.
While inflation persists (as it does for the rest of the economy), Shanker noted on Friday that DAL will see operating leverage when demand returns to a network that is prepared to handle it. This should help to counteract inflation.
Delta Air Lines Earnings: Airline Stocks
Estimates: According to FactSet, Wall Street projected DAL’s (revenue to increase by 40% to $12.9 billion, while earnings were forecast to soar 413% to $1.54 per share.
Results: In Q3, DAL’s profits increased by almost 400% to $1.51 per share. 40% more money was made, or $12.8 billion.
According to a statement from CEO Ed Bastian, “the travel recovery continues as consumer expenditure switches to experiences and demand strengthens in corporate and international travel.”
By the summer of 2023, the airline hopes to have its whole destination network operational again, according to Bastian. As a result, Delta (NYSE:DAL)predicts that in 2024 it will earn more than $7 per share and generate $4 billion in cash flow.
Outlook: In Q4 2019, compared to the same period in 2019, prior to the Covid epidemic, Delta forecasts that overall sales would rise 5%–9%. The corporation bases this expansion on “strong local and international demand” and enhanced corporate travel. Delta projects its fourth-quarter earnings per share to range between $1 and $1.25.
In comparison to 2019, transatlantic income increased by 12%, with Italy, Spain, and Greece among the popular travel destinations.
The Atlanta-based airline fell short of second-quarter sales and profits projections. But instead of improving, its EPS plunged to a loss of $1.07 in Q2 2021, rising to $1.44. In Q2, revenue rose 73% to $12.3 billion.
Recovery for Delta Stock (NYSE:DAL)
Throughout the epidemic, Delta (NYSE:DAL) experienced a streak of losses, just like other airlines. Before reporting six straight losing quarters, Delta earned $1.70 per share in the fourth quarter of 2019. Additionally, revenue decreased during the epidemic and didn’t reach pre-Covid levels until Q2 2022.
According to FactSet, analysts anticipate that full-year 2022 earnings will rise to $2.61 per share from a loss of $4.08 in 2021. Wall Street anticipates a 54% increase in annual revenues to $45.9 billion.
However, several airline stock experts have expressed concerns about price hikes, particularly airfares, given worries about a recession, despite Delta (DAL), United, Spirit Airlines (SAVE), and others being bullish about demand. In addition, there were concerns that, following an unusually robust summer, Q3 demand might wane after Labor Day.
In order to cooperate with Joby Aviation (JOBY) in providing an electric flying taxi service to airports in some locations, Delta stated on Tuesday that it has invested $60 million in Joby Aviation. The amount that Delta will contribute may rise to $200 million. The price of JOBY rose 7.7% on Tuesday.
Delta’s stock gets a 39 out of 99 Composite Rating. According to the proprietary IBD Stock Checkup indicator for share price movement, it has a Relative Strength Rating of 35. EPS is rated at 68.
Increase in international flights by United Airlines
As a result of the Covid epidemic, United Airlines stated early on Wednesday that it would be adding trans-Atlantic travel destinations to its itinerary.
Three new city destinations and six more flight choices to well-known locations, including Rome, Paris, Barcelona, London, and Berlin, will be added by United Reports starting in the summer of 2023.
The overall number of destinations served by the airline across Europe, Africa, India, and the Middle East now stands at 37. In a press statement, United said that during the summer peak, “demand for travel to Europe reached unprecedented levels, up 20% compared to 2019.”
According to the business, it is now “focused on growing its network to service sustained increase in demand.”
After American Airlines increased its third-quarter guidance on Tuesday, United decided to expand its foreign flight schedule.
American Airlines raises its recommendations
American, located in Fort Worth, Texas, stated on Tuesday that it anticipated third-quarter sales to increase 13% over the same period in 2019. Prior sales projections provided by the corporation predicted a growth of 10%–12%. In addition, AAL raised its expectation for total revenue per available seat mile (RASM) compared to the same time in 2019 from a previous range of 20% to 24 percent to 25%.
American Airlines maintained its $3.73–$3.78 per gallon range for its projections for the cost of jet fuel in Q3. The business did, however, reassess its cost per available seat mile, another crucial indicator utilized by the airline sector. American Airlines projects that these expenses will increase by 14% from Q3 2019 to Q4 2019, above its previous projection range of 12% to 14%.
After United Airlines made a comparable decision in September, American Airlines has increased its Q3 revenue projection. When compared to before the Covid-19 epidemic, UAL at the time claimed to have seen “high demand.”
Future Earnings
After the market closes on October 18, United Airlines will release its third quarter financial results. Analysts predict that earnings will increase from a loss of $1.02 per share to $2.26 per share. A 65% rise in sales to $12.7 billion is anticipated.
On October 2, American Airlines will release its third quarter profits. According to Wall Street, profits per share will soar to 53 cents from a loss of 99 cents last year. According to FactSet, analysts anticipate revenue to increase 49% to $13.4 billion.
Prior to the market opening on Thursday, Alaska Air Group releases its third quarter financial results. EPS is anticipated to improve by 62% to $2.38 per share, while revenues may rise by 47% to $2.8 billion.
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Author Valerie Remorosa 
