Delta Beats Q1 Earnings & Revenue Estimates, Withdraws FY25 View

Delta Air Lines (DAL Quick QuoteDAL – Free Report) reported first-quarter 2025 earnings (excluding 9 cents from non-recurring items) of 46 cents per share, which surpassed the Zacks Consensus Estimate of 40 cents. Earnings increased 2.2% on a year-over-year basis due to low fuel costs.

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Quarterly earnings were within the range provided by Delta last month. We remind investors that the airline trimmed its earnings per share and revenue outlook in March, citing economic uncertainties and the resultant reduction in consumer and corporate confidence, which hurt domestic air travel demand.

Revenues in the March-end quarter were $14.04 billion, surpassing the Zacks Consensus Estimate of $13.81 billion and increasing 2.1% on a year-over-year basis. Adjusted operating revenues (excluding third-party refinery sales) increased 3.3% year over year to $13 billion. 

Acknowledging that growth has stalled due to the tariff-induced uncertainty, DAL decided against reaffirming its 2025 financial guidance.  Management stated that it would provide an update later in the year as visibility improves.   

To combat the weak demand scenario, DAL reduced planned capacity growth in the second half of 2025 to flat year over year. This move is aimed at protecting margins and avoiding lowering fares.

Other Details of Q1

Passenger revenues, which accounted for 81.8% of total revenues, increased 3% year over year at $11.48 billion, missing our estimate of $11.58 billion.

Domestic passenger revenues inched up by merely 1% year over year. The marginal increase was attributable to the tariff-induced slowdown in domestic air travel demand. International passenger revenues were boosted by the buoyant demand for long-haul travel.

Cargo revenues improved 17% year over year to $208 million, which surpassed our estimate of $185.4 million. Other revenues decreased 4% to $2.35 billion, beating our estimate of $2.28 billion.

Adjusted operating margin was 4.6% in the first quarter of 2025 compared with 5.1% a year ago.

Below, we present all figures (in percentage terms) in comparison with first-quarter 2024 results.

Revenue passenger miles (a measure of air traffic) increased 3% to 55.67 billion. Capacity (measured in available seat miles) expanded 4% to 68.4 billion. The load factor (percentage of seats filled by passengers) decreased 130 basis points to 81.4%, below our estimate of 83%.

Passenger revenue per available seat mile declined 1% to 16.78 cents. Passenger mile yield was flat at 20.62 cents. On an adjusted basis, total revenue per available seat mile inched down 1% to 18.97 cents.

Total operating expenses, including special items, increased 3% to $13.47 billion. Salaries and related costs rose 8% to $4.1 billion. This increase was due to higher wages stemming from the contract with pilots that was ratified in 2023. Fuel gallons consumed jumped 5% to $976 million. Average fuel price per gallon (adjusted) fell 11% to $2.45. Non-fuel unit cost (adjusted or CASM-Ex) increased 2.6% to 14.44 cents.

DAL exited the first quarter of 2025 with cash and cash equivalents of $3.71 billion compared with $3.87 billion at the end of the first quarter of 2024. The company had an adjusted net debt of $16.9 billion at the end of the March quarter, a reduction of $1.1 billion from the 2024-end. Adjusted operating cash flow in the March quarter was $2.4 billion, with gross capital expenditures and free cash flow of $1.2 billion and $1.3 billion, respectively.

DAL Issues Q2 Guidance

Delta Air Lines, currently carrying a Zack Rank #3 (Hold), expects second-quarter 2025 adjusted earnings per share in the $1.7-$2.3 band. The Zacks Consensus Estimate is currently pegged at $2.62 per share.

The adjusted operating margin is expected in the 11-14% band. Revenues on an adjusted basis are expected to either fall 2% or increase upto 2% year over year.

Airline Stocks to Consider

Investors interested in the Zacks Transportation-Airline industry may consider better-ranked stocks like Ryanair Holdings (RYAAY Quick QuoteRYAAY – Free Report) and Southwest Airlines (LUV Quick QuoteLUV – Free Report) . Both stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RYAAY’s earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average beat of 44.5%. Ryanair has reported impressive traffic numbers over the past few months.

LUV has an expected earnings growth rate of 71.9% for 2025. Revenues in the current year are expected to grow 5.2% from 2024 actuals.

Southwest Airlines has an encouraging track record for earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark on the other occasion). The average beat is 58.6%.