Delta Air Lines Inc
DAL reported a second-quarter FY23 adjusted operating revenue growth of 19% year-over-year to $14.61 billion and operating revenue of $15.6 billion, beating the consensus of $14.46 billion.
Adjusted EPS was $2.68 above the consensus of $2.39.
Total passenger revenue was $13.21 billion, a 21% increase YoY. Cargo revenue decreased 37% Y/Y to $172 million.
Delta recorded an adjusted operating income of $2.5 billion (+73% Y/Y), with an adjusted operating margin of 17.1%.
Adjusted operating expenses increased by 12% Y/Y to $12.12 billion, and non-fuel costs increased 20% Y/Y to $9.01 billion for the quarter.
Delta Air Lines generated an adjusted operating cash flow of $2.65 billion, an increase of 7% Y/Y. Adjusted net debt at quarter-end increased 1% Y/Y to $19.84 billion.
Total revenue per available seat mile declined 4% Y/Y and increased 19% Y/Y on an adjusted basis. The passenger load factor was 88% vs. 87% in 2Q22.
DAL reported liquidity of $8.8 billion at quarter-end, including $2.8 billion in undrawn revolver capacity.
Adjusted average fuel price of $2.52 per gallon dropped 34% from last year's quarter.
"Robust demand is continuing into the September quarter where we expect total revenue to be similar to the June quarter, up 11 percent to 14 percent compared to the September quarter 2022 on capacity that is 16 percent higher," commented Glen Hauenstein, Delta's president.
"With an outlook for $3 billion of free cash flow in 2023, we are accelerating debt repayment with a goal of retiring over $4 billion in debt this year. We are on track to reduce leverage to 3x by the end of this year and achieve investment grade metrics in 2024," commented Dan Janki, Delta's chief financial officer.
3Q23 Outlook: Delta Air Lines expects revenue growth of 11% - 14%; EPS of $2.20 - $2.50 versus $2.05 estimate; and an adjusted operating margin in the mid-teens.
FY23 Outlook, raised: DAL sees EPS of $6 - $7 (prior $5 to $6) versus $6.15 estimate; revenue growth of +17%-20% (prior +15% - 20%); operating margin greater than 12%; and free cash flow guide of more than $3 billion.
Price Action: DAL shares are trading higher by 3.86% at $49.80 premarket on Thursday.
