What's Ahead for Delta Air Lines in Q4 Earnings?

Delta Air Lines (DAL) is set to release its fourth-quarter 2024 financial results on January 10, prior to the market opening.

In the last quarter of the year, Delta is projected to report a significant bottom-line growth of 37.5% compared to the same period last year. The airline's revenue is also anticipated to increase by 4.3% year-over-year.

The Zacks Consensus Estimate for Delta's earnings in the fourth quarter stands at $1.76 per share, reflecting a 0.6% upward revision over the last two months. Revenue expectations are pegged at $14.83 billion for the quarter.

Delta has a commendable track record regarding earnings surprises, having exceeded the Zacks Consensus Estimate in two out of its last four quarters while missing in the other two. The average earnings surprise has been around 7.5%.

Several factors are likely to impact Delta Air Lines’ performance for the yet-to-be-reported quarter. Strong passenger volumes are expected to lift Delta's revenues, especially from domestic markets, driven by increased travel during the Thanksgiving holiday period.

Additionally, declining oil prices may positively influence the bottom line, with Delta's forecast for fuel costs projected to be in the range of $2.20 to $2.40 per gallon; our estimate stands at $2.37 per gallon.

However, high labor expenses are anticipated to negatively affect Delta's profits, with expected non-fuel unit costs increasing by 3% compared to the fourth quarter of 2023.

In October 2023, Delta initiated legal action against CrowdStrike due to a cybersecurity incident in July that led to flight cancellations and passenger disruptions, costing the airline over $500 million in total. CrowdStrike has since sought to dismiss the lawsuit, citing contract stipulations, and updates on this matter could be discussed in Delta’s fourth-quarter conference call.

Delta's Earnings Prediction

Our analysis suggests that Delta Air Lines is positioned well for an earnings beat this quarter. The combination of a positive Earnings ESP and a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) enhances the likelihood of favorable earnings results. Currently, Delta possesses an Earnings ESP of +0.14% alongside a Zacks Rank of 3.

Previous Quarter Insights

In the third quarter of 2024, Delta reported earnings of $1.50 per share (excluding non-recurring items), which fell short of the Zacks Consensus Estimate of $1.56. This represented a 26.11% decline year-over-year, largely due to rising labor costs. However, Delta's third-quarter revenues totaled $15.68 billion, surpassing expectations of $15.37 billion and reflecting a year-over-year increase of 1.2% due to strong air travel demand.

Other Airline Options

Investors may also want to keep an eye on other airline stocks. One notable option is Southwest Airlines, which currently carries an Earnings ESP of +2.89% and a Zacks Rank of 3. Southwest plans to announce its fourth-quarter 2024 financial results on January 30, with strong passenger revenues expected to support its performance despite similar rising labor costs.

Delta, Earnings, Finance