Delta Air Lines posts record-breaking revenue but faces rising costs

Hauenstein added that as Delta’s international and domestic hubs approach pre-pandemic recovery levels, it will begin retiring aircraft at a normal rate again. Consequently, capacity growth will slow, with Q3 capacity expected to grow by 5% to 6% YoY and revenues by between 2% and 4% YoY.

Commenting on the financial performance, Dan Janki, CFO of Delta Air Lines remarked that the carrier hit the midpoint of its Q2 guidance with earnings per share (EPS) of $2.36 per share. Janki added that operational excellence drove an incremental point of capacity growth and favorable unit costs, with non-fuel unit costs rising by only 0.6% YoY. Looking ahead to Q3, Janki expects non-fuel unit costs to grow by 1% to 2% YoY.

Despite these gains, Delta ended Q2 2024 with adjusted revenues of $15.4 billion—a rise of 5.4% from Q2 2023—but adjusted operating costs increased to $13.1 billion (an increase of 8% YoY). This resulted in an adjusted operating margin drop to 14.7%, down from 17.1% during the corresponding period in 2023.

The airline concluded the quarter with an adjusted net income of $1.5 billion—$195 million less than in Q2 2023—a decrease of 11%. Adjusted non-fuel costs rose by 9%, while fuel-related expenses increased by 12%.

Premium products continued driving up revenues for Delta Air Lines; unaudited passenger revenues reached $13.8 billion—with premium products contributing $5.6 billion or about 40.5%. Premium cabin-related passenger revenues grew by 10% YoY while main cabin ticket revenue remained flat.

Despite some concerning signs such as dipping profits during one of the peak quarters of the year, Delta has adhered to its initial full-year guidance issued during its Q1 results announcement in April.

Reiterating this guidance, Delta estimated EPS would range from $6 to $7 for the full year with free cash flow between $3 billion and $4 billion while adjusted debt-to-EBITDAR would be from two times to three times.

For Q3 guidance specifically: expected revenue climb is projected at between five percent and seven percent; operating margin is anticipated at fourteen percent to fifteen percent; quarterly EPS should fall within two dollars twenty cents ($2.20) up through two dollars fifty cents ($2 .50).