- Delta's load factor came in slightly below analysts' expectations.
- Load factor is a key metric showing the percentage of a carrier's available seats that are filled with paying passengers.
- Delta expects to report a loss in Q1 FY 2022 as the omicron variant of the coronavirus disrupts the travel industry.
|Delta Air Lines Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Adjusted Earnings Per Share||Beat||$0.22||$0.10|
Source: Predictions based on analysts' consensus from Visible Alpha
Delta Air Lines (DAL) Financial Results: Analysis
Delta Air lines reported Q4 FY 2021 earnings that beat analysts' consensus estimates. Adjusted earnings per share (EPS) came in above analyst forecasts and were positive for the second consecutive quarter after a string of six straight quarterly adjusted losses per share since the start of the COVID-19 pandemic. Delta's revenue also surpassed analyst estimates, up 138.4% year over year (YOY). However, revenue is still below what it was in Q4 FY 2019, before the start of the pandemic. The airline's load factor slightly missed analyst expectations. The company's shares were up 2% in pre-market trading. Over the past year, Delta's shares have provided a total return of 0.8%, well below the S&P 500's total return of 24.3%.
DAL Load Factor
Delta's load factor was 78% for the fourth quarter, up YOY but down slightly from the previous quarter. Load factor is a key metric indicating the percentage of a carrier's available seats that are filled with paying passengers. A high load factor, as opposed to a low load factor, indicates that a high percentage of seats are 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 fill as many seats as possible by selling more tickets. Higher load factors mean an airline's fixed costs are spread across a greater number of passengers, making the airline more profitable.
Travel demand has continued to recover after it was decimated last year amid the pandemic. Delta's load factor gradually increased from a low point of 34.2% in Q2 FY 2020 to a recent high of 79.6% in Q3 FY 2021. This quarter's slip to 78% illustrates that the recovery in travel demand has slowed and still has some ways to go before the Delta's load factor can return to pre-pandemic levels of more than 85%.
The airline said in its earnings press release that the fast-spreading omicron variant of the coronavirus had disrupted travel across the industry during the quarter and is expected to continue affecting demand early in the first quarter of FY 2022. The company expects to report a loss in Q1 FY 2022. However, Delta also added that it expects pent-up demand for consumer and business travel to result in a strong spring and summer travel season, and the airline anticipates healthy profits in the final three quarters of the year.
Delta's next earnings report (for Q1 FY 2022) is expected to be released on Apr. 13, 2022.
Delta Air Lines Inc. "Delta Air Lines Announces December Quarter and Full Year 2021 Financial Results," Page 1. Accessed Jan. 13, 2022.
Delta Air Lines Inc. "Delta Air Lines Announces December Quarter and Full Year 2021 Financial Results," Page 7. Accessed Jan. 13, 2022.
Delta Air Lines Inc. "Delta Air Lines Announces December Quarter and Full Year 2021 Financial Results," Page 9. Accessed Jan. 13, 2022.
Visible Alpha. "Financial Data." Accessed Jan. 13, 2022.
TradingView. "Price Chart: DAL and S&P 500." Accessed Jan. 13, 2022.
Delta Air Lines Inc. "Delta Air Lines Announces December Quarter and Full Year 2021 Financial Results," Pages 1-3. Accessed Jan. 13, 2022.
Yahoo! Finance. "Earnings Calendar: DAL." Accessed Jan. 13, 2022.