Delta Q2 Earnings Miss Amid Robust Summer Travel Demand

Delta Air Lines has reported record revenue for the June quarter of 2024, with operating revenue reaching $16.7 billion and adjusted revenue at $15.4 billion, a 5.4% increase from the same quarter last year. Despite the strong revenue performance, the company's net income fell nearly 30% to $1.31 billion, or $2.01 per share, with operating expenses rising by 10%. The airline's adjusted earnings per share (EPS) for Q3 are expected to be between $1.70 and $2.00, falling short of Wall Street's expectations of $2.04.

Delta's CEO, Ed Bastian, noted that while summer travel demand remains robust, there is a growing price sensitivity among consumers. The company has reiterated its full-year earnings guidance of $6 to $7 per share and expects to generate $3 to $4 billion in free cash flow. Delta also aims for a double-digit operating margin in the September quarter, projecting a 5% to 6% growth in flying capacity and a 2% to 4% increase in revenue. Additionally, Delta has made significant progress in reducing its debt, bringing total debt and finance lease obligations down to $18 billion.

Despite the challenges, Delta continues to lead in profitability within the U.S. airline industry. The company credits its diversified revenue streams, including premium and loyalty segments, for contributing to its financial resilience. However, increased competition and lower ticket prices in the domestic market have impacted its profit margins, prompting a cautious outlook for the remainder of the year.