Delta Air Lines Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Estimate
Adjusted EPS Missed -$3.55 -$2.92
Revenue (GAAP) Beat $4.2B $3.9B
Load factor Missed 45% 48.2%

Source: Analyst Consensus from Visible Alpha

Key Takeaways

  • Load factor was lower and adjusted EPS was worse than analysts expected.
  • The lower passenger load factor suggests that Delta has not yet recovered from the COVID-19 pandemic even as the broader economy has begun to improve.
  • The company expects to return to profitability by Q3 2021 if current demand trends hold.

Delta Air Lines (DAL) Financial Results: Analysis

Delta Air Lines Inc. (DAL) reported Q1 FY 2021 earnings that were mixed. The passenger airline's adjusted net loss per share was far worse than analysts had predicted and was seven times bigger than the same quarter a year ago. Revenue beat consensus estimates though it was down by more than half year-over-year (YOY), a reflection of the impact of the ongoing COVID-19 pandemic on Delta's business. Note that Delta provided Q1 FY 2019 figures for comparison in its earnings release, but Investopedia is utilizing Q1 FY 2020 figures from the company's earlier reports.

Delta Chief Executive Officer (CEO) Ed Bastian announced that the company expects to return to profitability by Q3 FY 2021 if current recovery trends hold. The company also said it turned from burning cash earlier in the quarter to cash positive in the month of March with cash generation of $4 million per day. Delta did not provide specific earnings guidance in its Q1 release.

Delta's load factor of 45% for Q1 missed analysts' estimates by a wide margin, illustrating that Delta is far away from a full recovery. Load factor is a key measure of the company's efficiency. This metric measures the percentage of available seating capacity that is filled with passengers. A high load factor, as opposed to a low load factor, is associated with a high percentage of seats occupied by passengers. Because the costs of sending an aircraft into flight are relatively the same whether there are 50 people aboard or 100, airlines have a strong incentive to sell more tickets in order to fill seats. Delta's 45% load factor for Q1 was down from 73% in the same quarter a year earlier. This indicates that the company's efficiency has still been depressed due to pandemic-related restrictions, including the blocking of middle seats on flights.

Delta shares initially rose in pre-market trading after the company's earnings release at about 8:50 a.m. on April 15, 2021, but they then fell by more than 4% in morning trading. Still, the company has dramatically outperformed the S&P 500 over the past year amid forecasts of a global economic recovery and a rebound in air travel. As of April 15, the company has posted a total return over the past year of 105.2% as compared with 48.7% for the S&P 500.

Delta Air Lines (DAL) Earnings Call Recap

Delta President Glen Hauenstein said in the earnings release that the company saw a recent increase in customer demand resulting in current domestic leisure bookings 85% recovered compared to 2019 levels. Still, the company expects to post an adjusted pre-tax loss of up to $1.5 billion for Q2 FY 2021. On the company's conference call and in an interview with CNBC, Bastian said that the company has seen a huge surge in bookings in recent months and that Delta has made a turn. The company has resumed selling middle seats for flights after April 30.

Delta's next earnings report (for Q2 FY 2021) is estimated to be released on July 15.