Andy Wang visits The Watch List with Nicole Petallides sharing his thoughts on Delta Airlines' earnings report.

Delta Airlines Inc (DAL) 

  • $37 million in Q1 vs. -$363 million in the same period last year 
  • EPS: $0.06 in Q1 vs. -$0.57 in the same period last year 
  • High margin revenue streams (e.g. premium, loyalty, MRO) can drive improved earnings durability vs. Peers 
  • Rebound in business travel; 14% growth in corporate travel sales 
  • DAL shares trading at 6.5x 2025 EPS, below its historical range of 8x – 10x 
  • Risks: rising fuel costs/inflation persists + Boeing 737 Max 10 delayed deliveries 

 Delta has returned to profitability. Earnings: $37 million in Q1 vs. -$363 million in the same period last year. EPS: $0.06 in Q1 vs. -$0.57 in the same period last year.  

Investors still look cautious with Delta shares are currently trading at ~6.5x consensus 2025 EPS of $7.50, well below its historical range of 8x – 10x. The company is seeing high margin revenue streams (e.g. premium, loyalty, MRO) potentially driving improved earnings. Investors should like increasingly diversified revenues from Delta.  

According to Delta's management, Delta is the number five U.S. e-commerce retailer in the country. 60% of airline tickets are now sold through internal channels. They are largely off the Online Travel Agency (OTA) platforms. The health of Delta’s loyalty program remains strong. Co-brand spend on the Delta American Express credit card is approaching 1% of U.S. GDP. 

Risks: Airlines are cyclical so investors are weary. An eventual US recession will likely hurt airlines, but the consumer remains strong with the stock market up and unemployment low. Also Delta anticipates that the deliveries of the Boeing  737 Max 10 aircraft to the airline could be delayed until as late as 2027. Year-to-date commodity prices have risen in 2024 so fuel prices could negatively impact earnings.