Shares of Delta Air Lines Inc. surged toward a more-than two-year high Thursday, after the air carrier reported second-quarter profit and revenue that rose above forecast, and boosted its full-year outlook citing continued “robust” travel demand.
Delta DAL, -1.46%
said net income more than doubled to $1.83 billion, or $2.84 a share, from $735 million, or $1.15 a share, in the year-ago period.
Excluding nonrecurring items, adjusted earnings per share of $2.68 beat the FactSet consensus of $2.40.
Revenue grew 12.7% to $15.78 billion, well above the FactSet consensus of $14.44 billion,
For 2023, the company raised its EPS guidance range to $6 to $7 from $5 to $6, and increased its outlook for free cash flow to $3 billion from $2 billion.
The stock jumped 3.5% in premarket trading, putting it on track to open at the highest price seen during regular-sessions hours since April 2021.
“Consumer demand for air travel remains robust,” said Chief Executive Ed Bastian.
Traffic increased 18.0% to 60.80 billion revenue passenger miles while capacity grew 17.1% to 68.99 billion available seat miles. Load factor improved one percentage point to 88%, to beat the FactSet consensus of 87.2%.
The stock has run up 42.1% over the past three months through Wednesday, while the U.S. Global Jets exchange-traded fund JETS, -0.81%
has climbed 22.1% and the S&P 500 index SPX, +0.74%
has gained 9.3%.
President Joe Biden rolled out a plan on Monday that targets how airlines handle flight cancellations and significant delays that are within a carrier’s control.
Biden said his administration will propose a new regulation later this year that would require airlines to provide cash compensation in addition to refunds and amenities for stranded passengers.
Shares of Delta Air Lines Inc. surged Thursday, after the air carrier swung to a first-quarter profit as revenue rose above expectations, and said it was “confident” in its full-year projections given a “strong” outlook for the current quarter.
The company reported a net loss that narrowed to $363 million, or 57 cents a share, from $940 million, or $1.48 a share, in the same period a year ago.
Shares of American Airlines Group Inc. were rocked Wednesday, after the air carrier raised its profit outlook, but not by enough to match Wall Street expectations.
The company said before the open that it expects first-quarter adjusted earnings per share of 1 cent to 5 cents, compared with a per-share loss of $2.32 a year ago. While that’s better than previous guidance for an “approximately breakeven” quarter, the average EPS estimate of analysts surveyed by FactSet was 5 cents.
Normal air traffic operations are “resuming gradually” across the U.S. following the lifting of a ground stop by the Federal Aviation Administration, the agency said in a tweet Wednesday. The stop was lifted following a computer outage that resulted in thousands of delays. More than 3,700 flights were delayed and more than 640 were canceled, according to the Associated Press. President Joe Biden said he expects a report on the outage in a couple of hours.
Airlines stocks fell across the board in premarket trade Wednesday, after the Federal Aviation Administration said a computer outage had led to all U.S. fights being grounded. The agency said on its website that its “Notice to Air Missions” system has been activated “to address the equipment outage issues for the U.S. NOTAM system.” A NOTAM is a notice for workers engaged in flight operations. There was no indication of when service might be restored. Southwest Airlines Co. LUV, +1.68%
led the decliners, falling 2.5%. American Airlines Group Inc. AAL, +3.97%
was down 1.6%, United Airlines Holdings Inc. UAL, +5.54%
was down 0.8%, JetBlue Airways Corp. JBLU, +4.92%
was down 0.7% and Delta Air Lines Inc. DAL, +3.59%
was down 0.7%. The U.S. Global Jets ETF JETS, +2.40%
was down 0.7% and has fallen 14% in the last 12 months, while the S&P 500 SPX, +0.70%
has fallen 17%.
Delta Air Lines’ stock rose 4.7% before market open on Wednesday after the company raised its earnings guidance.
The carrier DAL, -4.00%
said it is executing on its three-year recovery plan, with year-one results ahead of expectations. Delta also highlighted robust demand for air travel as the industry recovers from the widespread disruption caused by the COVID-19 pandemic.
The carrier raised its 2022 adjusted EPS guidance to $3.07 to $3.12. Analysts surveyed by FactSet were looking for earnings of $2.88 a share. For 2023, Delta Air Lines Inc. forecast a near doubling of adjusted earnings to $5 to $6 a share.
Delta also forecast 2023 revenue growth at 15% to 20% compared with 2022 and said it is on track to meet its 2024 earnings target of more than $7 a share.“Demand for air travel remains robust as we exit the year and Delta’s momentum is building,” said Delta CEO Ed Bastian, in a statement.
Delta said it expects to deliver strong topline growth in 2023 and significant operating leverage, boosted by a full restoration of its network and continued improvements in premium and loyalty revenue.
Non-fuel unit costs are expected to decline 5% to 7%, driving Delta’s margin expansion and adjusted earnings growth, the company said. Delta expects to generate more than $2 billion of free cash flow, which it said will enable further debt reduction.
“2022 is proving to be a pivotal year as we rebuild the world’s best-performing airline,” said Bastian, in the statement.
The company’s robust guidance boosted other airline stocks before market open, with United Airlines Holdings Inc. UAL, -6.94%
rising 1.4%, American Airlines Group Inc. AAL, -5.21%
gaining 1.3%, and JetBlue Airways Corp. JBLU, -7.67%
rising 1.3%.
Delta shares have fallen 14.6% this year, compared with the S&P 500 index’s SPX, +0.73%
decline of 15.7% and the U.S Global Jets ETF’s JETS, -2.85%
slump of 14.3%.
The Centers for Disease Control and Prevention said a new COVID variant dubbed BQ.1 and a descendant called BQ.1.1 have gained traction in the U.S., accounting for 11.4% of new cases across the nation in the week ending Oct. 15.
The two variants are lineages of BA.5, the omicron subvariant that remains dominant but has shrunk to account for just 67.9% of circulating variants, the agency said in a Friday update. The CDC had previously combined BQ.1 and BQ.1.1 with BA.5 cases because the numbers of the new variants were so small. BQ.1 was first identified by researchers in early September and has been found in the U.K. and Germany, among other places.
New York and New Jersey currently have the highest proportion of BQ.1 and BQ.1.1 infections, at about 20% of overall cases, according to CDC estimates.
“When you get variants like that, you look at what their rate of increase is as a relative proportion of the variants, and this has a pretty troublesome doubling time,” Anthony Fauci, President Joe Biden’s chief medical adviser, said in an interview with CBS News.
Adding to concerns, the variant seems “to elude important monoclonal antibodies,” he added.
Fauci is confident that Moderna MRNA, +3.92%,
as well as Pfizer PFE, +1.84%
and German partner BioNTech BNTX, +2.45%,
will be able to update boosters to target the new subvariant. “The somewhat encouraging news is that it’s a BA.5 sublineage, so there are almost certainly going to be some cross-protections that you can boost up,” he said.
So far, only 14.8 million people living in the U.S. have taken advantage of the new bivalent boosters that were authorized by the Food and Drug Administration in late August. That’s equal to about 7% of the 209 million who were initially eligible.
The FDA authorized the Pfizer booster for use in people aged 12 and older and the Moderna booster for adults aged 18 and older. Last week, the FDA added children aged 5 to 11 to the Pfizer program and children aged 6 through 17 to the Moderna one.
Experts are concerned that the low number of vaccinations is due to a sense that the pandemic is over and no longer poses a major risk for most people. U.S. cases are steadily declining and now stand at their lowest level since mid-April; however, the true tally is likely higher than the official count, because many people are testing at home, where data are not being collected.
The daily average for new cases stood at 37,649 on Sunday, down 19% from two weeks ago, according to a New York Times tracker.
The daily average for hospitalizations was down 5% to 26,475, while the daily average for deaths was down 8% to 374.
But cold weather is expected to bring a new wave of cases, and hospitalizations are rising again in much of the Northeast, the Times tracker is showing.
“That’s the thing that’s so frustrating for me and for my colleagues who are involved in this, is that we have the capability of mitigating against this. And the uptake of the new bivalent vaccine is not nearly as high as we would like it to be,” said Fauci.
• Moderna and Gavi, the Vaccine Alliance, which is supplying vaccines to low- and middle-income countries, have agreed to cancel remaining orders under their 2022 COVID-19 vaccine agreement given “sufficient supply.” The biotechnology company has supplied Gavi with nearly 70 million doses of COVID-19 vaccines, in addition to facilitating the donation of more than 100 million doses. Moderna and Gavi said they will create a new framework that enables Gavi to buy up to 100 million COVID-19 vaccine doses in 2023.
• The World Health Organization, the Food and Agriculture Organization of the United Nations, the United Nations Environment Program and the World Organization for Animal Health on Monday launched a new initiative that aims to address health threats to humans, animals, plants and the environment. The One Health Joint Plan of Action “aims to create a framework to integrate systems and capacity so that we can collectively better prevent, predict, detect, and respond to health threats,” the four agencies said in a statement.
• China is doubling down on its zero-COVID strategy as a historic Communist Party congress opens in Beijing, BBC News reported. Zero COVID was a “people’s war to stop the spread of the virus,” said President Xi Jinping as he kicked off the meeting. There is increasing public fatigue over lockdowns and travel restrictions, and Beijing has come under strict security measures ahead of the congress, sparking frustration in the city, including a rare and dramatic public protest on Thursday criticizing Xi and his strategy.
In a rare display of defiance, two banners were unfurled from a highway overpass in Beijing condemning Chinese President Xi Jinping and his strict COVID-19 policies. The protest took place days before the expected extension of Xi’s tenure.
• Airline stocks rallied Monday after data showed that on Sunday, more people flew than on any other day since before the pandemic. Data from the Transportation Security Administration showed that 2.495 million travelers went through TSA checkpoints on Sunday, which is just above the previous 2022 high of 2.490 million on July 1 and the most since Feb. 11, 2020, which was exactly one month before the World Health Organization declared COVID-19 a global pandemic. In comparison, the day with the fewest travelers since the start of the pandemic was April 12, 2022, with 87,534 people traveling. And in 2019, there were 116 days of more travelers than Sunday, while the average for that year was 2.306 million. The U.S. Global Jets ETF JETS, +2.02%
was up 2.2%.
The U.S. leads the world with 96.9 million cases and 1,065,118 fatalities.
The Centers for Disease Control and Prevention’s tracker shows that 226.2 million people living in the U.S., equal to 68.1% of the total population, are fully vaccinated, meaning they have had their primary shots. Just 110.8 million have had a booster, equal to 49% of the vaccinated population, and 25.6 million of those who are eligible for a second booster have had one, equal to 39% of those who received a first booster.
