What to Expect from Delta Air Lines in Q4 Earnings

Delta Air Lines (DAL) is set to publish its fourth-quarter 2024 earnings report on January 10, prior to market opening.

In the December quarter, the airline is anticipated to show a significant rise of 37.5% in earnings year-over-year. Additionally, revenues are forecasted to increase by 4.3% compared to the previous year.

The Zacks Consensus Estimate for Delta's earnings in the fourth quarter of 2024 stands at $1.76 per share, reflecting a 0.6% uptick in estimates over the previous two months. The revenue estimate for this period is currently at $14.83 billion.

Delta has a mixed track record in terms of earnings surprises, outperforming the Zacks Consensus Estimate in two of the last four quarters, while falling short in the other two, with an average beat of 7.5%.

With this context in mind, several factors likely impacted Delta Air Lines' performance in the upcoming earnings report.

The airline is expected to benefit from strong passenger volumes this past quarter, particularly from the domestic market. High travel during events like Thanksgiving is likely to have contributed to improved revenue figures.

Furthermore, decreasing oil prices might have also had a positive effect on the bottom line. Delta projects fuel prices in the range of $2.2 to $2.4 per gallon for the December quarter, with current estimates positioned at $2.37 per gallon.

However, rising labor costs are expected to negatively influence the company's profits. Delta foresees a 3% increase in non-fuel unit costs, measured as cost per available seat mile (CASM: adjusted), when compared to the prior year's fourth quarter.

In October 2023, Delta initiated a lawsuit against CrowdStrike due to a cybersecurity incident in July, which led to significant flight cancellations and customer disruptions. Delta claims this incident incurred over $500 million in costs related to canceled flights, refunds, and passenger accommodations. As of December, CrowdStrike has sought to dismiss the lawsuit, citing contractual terms. An update on this situation is expected during Delta's fourth-quarter earnings call.

What Our Model Indicates for DAL

Our analysis suggests Delta Air Lines is likely to report an earnings beat this quarter. The combination of a positive Earnings ESP (Earnings Surprise Prediction) and a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) raises expectations for a favorable earnings outcome. Currently, Delta holds an Earnings ESP of +0.14% with a Zacks Rank of #3.

Overview of DAL’s Third Quarter Results

In its third-quarter report for 2024, Delta posted earnings of $1.50 per share (excluding 47 cents from non-recurring items), which fell short of the Zacks Consensus Estimate of $1.56 per share, marking a 26.11% decrease year-over-year mainly due to elevated labor costs.

On the revenue front, Delta achieved $15.68 billion, surpassing the Zacks Consensus Estimate of $15.37 billion, with a modest year-over-year increase of 1.2% attributed to strong demand in air travel. Adjusted operating revenues, excluding third-party refinery sales, were flat at $14.59 billion year-over-year.

Another Airline to Watch

Investors may also want to consider Southwest Airlines (LUV), as our model shows it may exceed earnings estimates for the fourth quarter of 2024. Currently, LUV presents an Earnings ESP of +2.89% and holds a Zacks Rank of #3. LUV's fourth-quarter earnings report is scheduled for January 30, with expectations of high passenger revenues, although increased labor costs may weigh on its bottom line.

Earnings, Delta, Airlines