Delta Earnings: What Happened

Revenue, EPS, and load factor all fell by more than expected

What to Expect from Delta Air Lines Earnings

  • Delta reported adjusted EPS of -$0.51 vs. the -$0.12 expected by analysts.
  • Revenue fell below expectations
  • Load factor was significantly below expectations, falling to 73.1% vs. the 80.3% expected by analysts.

What Happened

Delta Air Lines reported earnings on the morning of April 22nd, and it was not a good sign for the airline industry. It was clear beforehand that airlines would be substantially hurt by the COVID-19 pandemic, as lockdowns have stopped travel across the world. However, the damage was worse than expected on all fronts. Delta reported earnings per share of -$0.51, significantly worse than the -$0.12 a share expected. Revenue also fell below expectations. The airline's load factor, the key to maintaining profitability, fell substantially, both in absolute terms year over year, and relative to expectations. This means that even with many flight cancellations, a high percentage of seats are staying empty, more than a quarter of seats overall. Delta's shares have declined 2.5% on the news, at time of writing.

(Below is Investopedia's original earnings preview, published 4/13/20)

What to Look for

Shares of Delta Air Lines Inc. (DAL) traded near record highs during the past year and then suddenly went into a tailspin in recent months due to the coronavirus pandemic. The global spread of the virus triggered stringent government-imposed travel restrictions that slashed Delta's passenger volume. Investors will get a first glimpse of the damage when Delta reports earnings on April 22 for Q1 2020. Analysts expect Delta to report its first year-over-year (YOY) decline in earnings per share in the past 10 quarters and its first revenue drop in the past 12 quarters.

One key metric that investors are likely to focus on in this week's earnings report is Delta's load factor, an efficiency gauge that measures what percentage of Delta's seating capacity is being used. Expectations are grim for the year 2020 and any forecast, even those provided in this story, are likely to have wide margins of error considering the enormous uncertainty arising from the rapid economic shutdowns that have taken place across the globe.

Delta's stock started plunging only recently, in mid-February, hammering its annual return. Its stock has dramatically underperformed the market with a total return of -59.9% over the past 12 months compared to the S&P 500's total return of -9.2%.

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

Before the coronavirus outbreak gained full momentum, Delta's shares made a modest pullback during the second half of January, just days after the company issued a strong Q4 earnings report for FY 2019. It beat expectations by 21.4%. Delta posted YOY growth in adjusted earnings per share (EPS) of 30.6% on YOY revenue growth of 6.5%, both of which were relatively consistent with growth rates reported in earlier quarters throughout the year. Delta's shares also slipped in October when it announced that it was expecting non-fuel unit costs to rise more than previously forecast. But after Q3 earnings rose 29% and modestly beat expectations, the shares began rising again.

That steady financial performance in 2019 was aided by the fact that Delta's fleet of aircraft does not include the Boeing 737 Max, the aircraft that has been grounded since March 2019 after being involved in two fatal crashes within the span of five months. Other airlines have had to cancel thousands of flights because they are unable to use their Max aircrafts.

It wasn't until February of this year that the pandemic began to damage the results of Delta and other airlines. Now, analysts expect Delta's adjusted EPS for Q1 2020 to fall 112.4% YOY and revenue to fall 7.4% YOY.

Delta Key Metrics
  Estimate for Q1 2020 (FY) Q1 2019 (FY) Q1 2018 (FY)
Adjusted Earnings Per Share -$0.12 $0.96 $0.75
Revenue (in billions) $9.7 $10.5 $10.0
Load Factor 80.3% 82.7% 82.9%

Source: Visible Alpha

Plunging airline travel means that Delta investors will be focused on the company's load factor, which is likely to drop due to government-imposed restrictions, as well as by business employees' and individuals' voluntary decision not to travel. Load factor is a metric that 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. Higher load factors mean an airline's fixed costs are spread across a greater number of passengers, making the airline more profitable.

Analysts are expecting Delta to report that its load factor fell by 2.4 percentage points to 80.3% in Q1 2020 compared to a year earlier. It would make for the lowest quarterly load factor the company has reported in at least the last three-and-a-half years. The estimated decline in Delta’s load factor in Q1 is more dramatic compared to the most recent Q4 of 2019, when the load factor was 85.6%. Analysts expect a decline of 5.3 percentage points between Q4 and Q1. That could be just the beginning. Delta and the rest of the airline industry are likely to see their load factors and the rest of their financial metrics continue to deteriorate if the virus is not contained. 

Article Sources
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  1. Visible Alpha

  2. Yahoo! Finance. "Delta Air Lines, Inc. (DAL) Analysis,"

  3. Delta Air Lines Inc. "Investor Update October 2, 2019," Page 1.

  4. Barron's. "Boeing Just Extended It Seattle-Area Shutdown. It’s Still Trying to Get the 737 MAX Flying Again.,"

  5. CNBC. "Delta shares fall sharply as higher costs overshadow strong travel demand,"

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