Delta Air Lines Surpasses Expectations, Eyes Record Revenue in Q2

Delta Air Lines surpassed market expectations with its Q1 results and is anticipated to record its all-time high revenue in Q2.

Delta Air Lines’ revenue for Q1 this year was $13.7 billion, marking a 7.8% year-over-year increase, and its operating profit successfully turned to a surplus of $610 million. Non-GAAP earnings per share outperformed market consensus, recording $0.45.

“Due to the strong demand for corporate travel, premium sales increased by 10% year over year, and the revenue from passengers on the North America-Pacific route increased by 31%, recording the strongest demand increase among routes,” said Jeong Yeon Seung, a researcher at NH Investment & Securities.

Delta Air Lines has provided Q2 revenue guidance of $15.3 to $15.6 billion, marking a record high. The company expects 30% growth in Pacific route sales for the year, drawing on strong demand in Korea and Japan, and anticipates maintaining fare levels rather than reducing them.

Researcher Jeong believes that “the restriction on direct flights between the U.S. and China presents an opportunity for Korean airline companies.”

On April 11, major U.S. airline companies (AAL, DAL, UAL, etc.) and airline unions urged the U.S. government to halt the expansion of direct flights between the U.S. and China. Currently, there are 35 round-trip flights per week, but since March 31, Chinese airline companies have been able to expand up to 50 flights per week.

This is a third of the level of 2019, before the COVID-19 era. U.S. airline companies do not pass through Russian airspace, which puts them at a disadvantage compared to Chinese airline companies that do. They have requested that the expansion of direct flights between the U.S. and China be halted until this disadvantage is resolved.

“If direct flights are restricted, the supply capacity in the Asia-North America region will be limited, thus strengthening the influence of the JV between Korean Air and Delta Air Lines since they have a supply advantage in the region,” Jeong predicted.

In addition to passenger supply constraints, there could also be constraints on cargo supply through belly loads, which may result in long-haul fares and cargo fares continuing at higher levels than in the past.