Delta Air Lines (DAL) Stock Surges 13% on Strong Q1 Earnings Despite Rising Fuel Pressures

Key Takeaways

• Delta’s first-quarter adjusted earnings per share reached 64 cents, surpassing analyst projections of 58 cents; quarterly revenue of $14.2 billion exceeded forecasts.
• Shares of DAL climbed approximately 13% during premarket hours, while competing airlines United, American, and Southwest gained between 9% and 11%.
• The carrier projects second-quarter adjusted EPS between $1.00 and $1.50, with a $1.25 midpoint falling short of the $1.41 Wall Street consensus.
• Second-quarter fuel expenses are projected to increase by over $2 billion compared to last year, as jet fuel prices have roughly doubled since late February amid Iran tensions.
• The airline eliminated all planned capacity expansion for the second quarter and implemented higher checked-baggage fees to counterbalance elevated costs.

Delta Air Lines delivered first-quarter results that exceeded Wall Street projections, propelling shares significantly higher during Wednesday’s premarket session. The positive performance coincided with news of a two-week U.S.-Iran ceasefire, providing further momentum across the airline sector.

The carrier’s adjusted profit reached 64 cents per share, outperforming the 57–58 cent Wall Street forecast. Quarterly revenue totaling $14.2 billion similarly exceeded projections. Competing airlines including United, American, and Southwest experienced premarket gains ranging from 9% to 11% following Delta’s announcement.

Delta Air Lines, Inc., DAL

However, the second-quarter forecast presented a more conservative picture. Delta projected adjusted earnings per share between $1.00 and $1.50, placing the $1.25 midpoint beneath the $1.41 analyst consensus. Management opted against revising full-year projections, pointing to ongoing fuel market volatility.

Jet fuel pricing has approximately doubled since the end of February, propelled by escalating Iran-related tensions. Delta anticipates paying approximately $4.30 per gallon during the second quarter, representing an additional $2 billion expense compared to the corresponding period last year.

To mitigate the financial impact, Delta is deploying multiple strategic responses. The company’s proprietary oil refinery is projected to generate a $300 million benefit in the second quarter, substantially higher than the approximately $60 million contribution in the first quarter as refining margins expanded. Chief Executive Ed Bastian indicated the airline targets recovering 40–50% of elevated fuel costs through ticket price adjustments during the quarter.

The carrier also implemented higher checked-baggage fees on Tuesday, mirroring recent actions by United and JetBlue. Bastian left open the possibility of making the increases permanent. “Given this fuel price level, it’s challenging to characterize anything as temporary,” he noted.

Capacity Adjustments Implemented

Delta eliminated all anticipated capacity expansion from the June quarter, representing approximately a 3.5 percentage point reduction from initial projections. The airline added that capacity growth expectations now carry a “downward bias pending fuel environment improvement.”

U.S. carriers collectively have trimmed planned domestic capacity growth by over half a percentage point since mid-March. Delta’s refinery operations and robust demand profile position it relatively better among competitors to weather the cost pressures.

Bastian reported that ticket sales increased at double-digit rates year-over-year during the past month, with strength extending into the second quarter. Affluent travelers specifically have demonstrated continued spending resilience.

Wall Street Estimates Show Wide Dispersion

Full-year earnings per share projections among analysts span from merely 15 cents to $7.50, highlighting substantial uncertainty regarding future fuel price trajectories. The consensus estimate stands around $5.40–$5.52, according to LSEG and FactSet data.

JPMorgan adopted the most conservative stance, dramatically reducing its projection from $7.05 to only 15 cents. Analyst Jamie Baker explained the team had “adopted” a full-year jet fuel assumption that higher ticket prices likely cannot offset — although JPMorgan preserved an Overweight rating on the shares.

UBS analyst Atul Maheswari maintained a Buy rating with a $5.12 EPS forecast, while acknowledging he wouldn’t be surprised if Delta withdraws its full-year guidance altogether.

In January, Delta had issued full-year adjusted EPS guidance of $6.50 to $7.50. Bastian declined to modify that projection range on Wednesday.

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