Delta Air Lines Q3 FY2022 Earnings Report Preview: What to Look For

Focus on DAL load factor

Key Takeaways

  • Analysts estimate adjusted EPS of $1.53 vs. $0.30 in Q3 FY 2021.
  • Load factor is expected to rise sharply YOY to its highest level in three years.
  • Revenue is expected to be at its highest level in at least four years.

Delta Air Lines Inc. (DAL), the world's largest airline before the pandemic crippled global travel, is expected to say profit quintupled in the third quarter as its load factor reached a three-year high.

Delta will probably say early on Oct. 13 that adjusted earnings per share (EPS), excluding certain items, jumped to $1.43 from $0.30 in the same period a year ago, according to consensus estimates provided by Visible Alpha. It would be the fourth profit in five quarters after a string of losses, as revenue rises 54% to $14.1 billion and its load factor, a key metric used by airlines to gauge what percentage of seats are filled by paid passengers, increases to 87.7%.

The results are likely to underscore the global industry's recovery from COVID-19 pandemic as travel restrictions ease, according to the International Air Transport Association. Air carriers lost $137.7 billion in 2020 and $42.1 billion in 2021.

Granted, Delta and its rivals still face challenges, including accelerating inflation that's pushed up ticket prices and threaten to curb demand for travel. Higher fuel prices, meantime, add to Delta's costs. Its shares are down 33% in the past year on a total return basis, compared with a 17% decline in the S&P 500.

One Year Total Return for S&P 500 and Delta Air Lines
Source: TradingView.

Delta Air Lines Earnings History

Delta posted adjusted EPS of $2.32 in Q3 FY 2019 before reporting six consecutive quarterly losses beginning in Q1 FY 2020, including a loss of $3.30 in Q3 FY 2020. It returned to profit in 3Q 2021.

Revenue started to rebound after declining for five quarters through Q1 FY 2021. It almost doubled to $13.8 billion in Q2 2022, surpassing pre-pandemic levels. For Q3, analysts expect an even stronger performance, estimating the highest revenue in four years.

Delta Key Stats
  Estimate for Q3 FY 2022 Q3 FY 2021 Q3 FY 2020
Adjusted Earnings Per Share ($) 1.53 0.30 -3.30
Revenue ($B)  14.1 9.2 3.1
Load Factor (%)  87.7 79.6 40.8

Source: Visible Alpha

The Key Metric

Load factors are key metrics because the cost of sending an aircraft into flight are relatively the same whether 50 or 100 paying passengers are aboard. That gives airlines an incentive to fill as many seats as possible. Higher load factors mean an airline's fixed costs are spread across a greater number of passengers, making the airline more profitable.

Delta's annual load factor ranged from 84.6% to 86.4% during the five years between 2015 and 2019, plunging to 54.7% in 2020 and edging up to 69.3% in 2021. Analysts expect is to keep rising this year, bolstering its recovery from the pandemic.

Article Sources
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  1. International Air Transport Association. "Travel Recovery Rebuilding Airline Profitability - Resilient Industry Cuts Losses to $9.7 billion."

  2. Delta Air Lines Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 2.

  3. Visible Alpha. "Financial Data."

  4. CNBC. "High inflation has many Americans tweaking their holiday travel plans."

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