By Callum Keown
Delta Air Lines crushed earnings and revenue estimates amid red-hot travel demand in the fourth quarter, sending the stock flying higher.
The even better news for investors was that Delta sees strong demand continuing in 2025. The carrier expects first-quarter revenue to grow between 7% and 9% year over year, with earnings per share of between 70 cents and a $1. Both those metrics top Wall Street estimates for a 5% revenue jump and profit of 77 cents.
The stock rose 5.6% to $64.85 in premarket trading. Heading into Friday’s session, the shares have gained 20% over the past three months.
The one disappointment may be Delta’s full-year earnings guidance of $7.35 a share in 2025, which is a little below the $7.44 expected by analysts.
But investors don’t seem perturbed by that for now, instead focusing on a bumper 2024 and a strong start to the year for the airline.
The carrier posted revenue of $15.6 billion in the fourth quarter, smashing estimates of $14.2 billion, helped by strong demand around the holidays in November and December.
In the final two months of 2024, the airline had four of the top 10 revenue days in its history.
Adjusted earnings of $1.85 a share also beat expectations of $1.76.
This is breaking news. Read a preview of Delta’s earnings below and check back for more analysis soon
Airline stocks have been flying recently, which makes earnings season tricky to navigate for investors.
Delta Air Lines is first up. Its fourth-quarter results, due early Friday, are likely to be key in determining whether the sector’s gains can continue in the early months of 2025.
The U.S. Global JETS exchange-traded fund, which tracks the performance of airlines, has climbed 24% over the past three months, buoyed by Donald Trump’s election victory and strong holiday travel demand. Delta has jumped 20%, American Airlines is up 47%, and United Airlines has soared 75% in that time.
The S&P 500 has risen just 2.2% over the same period.
“Given the run-up in airline stocks lately, we believe the bar is high heading into the reporting season,” UBS analyst Thomas Wadewitz said in a note this week. That means there’s “limited room for any disappointments.”
UBS expects positive forecasts from U.S. carriers but said the focus will be on their predictions for revenue per available seat mile, or RASM. Growth in that metric will be crucial for airlines to expand their margins as inflation continues in 2025, Wadewitz said.
The bank’s analysts said that for Delta stock to rise after earnings the carrier needs to signal first-quarter RASM growth of 2% or higher and predict earnings per share of more than 77 cents, the consensus forecast among analysts surveyed by FactSet.
They rate the stock at Buy with a target for the price of $88, implying a gain of 43% relative to Wednesday’s closing price.
Delta’s forecast for its full-year 2025 earnings per share will also be of interest. In November, management said it expected growth of 10%, but Wall Street is more upbeat. Analysts’ consensus forecast is for EPS of $7.44 in 2025, some 22% more than the $6.11 they expect for all of 2024. Estimates for 2025 range from $6.90 to $7.95, according to FactSet.
For the fourth quarter, analysts are expecting earnings of $1.76 per share from revenue of $14.2 billion.
Shares of U.S. carriers have rallied since November’s election because the president-elect is expected to ease the regulatory burden on airlines. His pro-business policies and tax-cut plans could also potentially boost both corporate and leisure travel in 2025 and beyond.
Record-breaking holiday travel has also helped. Dec. 1 was the busiest day in U.S. aviation history as the Transportation Security Administration screened 3.09 million passengers at airports across the country.
Delta, typically the first carrier to release earnings, often sets the tone and highlights the trends likely to emerge across the sector in the reports in the weeks ahead.
TD Cowen analyst Tom Fitzgerald is optimistic, forecasting higher fourth-quarter earnings than the Wall Street consensus for every airline, except Sun Country. “We believe [the fourth quarter] was robust (outside the election) with healthy demand, increasing pricing, and favorable fuel,” he said in a note Monday. He added that his checks indicated that first-quarter bookings are solid and domestic markets are still benefiting from capacity cuts.
Write to Callum Keown at callum.keown@dowjones.com