To The Moon

$Delta Air Lines(DAL)$ is expected to release its quarterly earnings result for fiscal Q1 2025 on 09 April 2025 before the market open.

The consensus estimate for Q1 2025 revenues is expected to come in at $13.8 billion. The earnings per share consensus estimate for Q1 2025 is anticipated to be at 44 cents per share, this is a slight drop from same period last year.

Delta Air Lines (DAL) Last Positive Earnings Call Saw Decline Of 36.82%

DAL had a positive earnings call on 10 Jan 2025 which saw its share price decline by 36.82%.

The earnings call reflected a strong financial performance for Delta in 2024, with record profits and operational excellence. The outlook for 2025 is positive, with anticipated revenue growth and strategic partnerships enhancing customer experience. However, there are some challenges noted, such as the impact of wildfires and pressure on main cabin revenue, but these do not overshadow the overall positive trajectory.

Delta Air Lines (DAL) Guidance

During the Delta Air Lines Q4 2024 earnings call, the executives provided optimistic guidance for 2025. They projected a 7% to 9% revenue growth for the March quarter, driven by strong demand and industry dynamics. Operating margins are expected to expand by 2 points, with earnings per share (EPS) nearly doubling from the previous year. For the full year, Delta anticipates EPS greater than $7.35, indicating a growth of over 20% compared to 2024, with free cash flow surpassing $4 billion. The company plans to reduce its leverage ratio to 2x or less, supported by robust cash generation, while maintaining low single-digit non-fuel unit cost growth.

Additionally, Delta highlighted an expected capacity increase of 3% to 4%, mainly in premium cabins, and emphasized the significant role of partnerships and technology in enhancing customer experience and loyalty.

Key Factors Impacting Delta Air Lines (DAL) Q1 2025 Earnings

Delta is on track for its best financial year with expectations of more than $4 billion in free cash flow and earnings per share greater than $7.35.

Macroeconomic Environment

Travel Demand: Business and leisure travel trends, including corporate spending and consumer confidence.

Economic Health: Recession risks or growth in 2025 could affect demand for air travel. S&P upgraded Delta, restoring its balance sheet to investment-grade level at all three major credit agencies.

Fuel Costs: Oil price volatility and Delta’s hedging strategies will impact expenses.

Operational Efficiency

Fleet modernization (e.g., fuel-efficient Airbus A321neo) may reduce costs. Delta achieved industry-leading performance with the #1 system completion factor and on-time performance, and was recognized with Cirium's Platinum Award for operational excellence for the fourth consecutive year.

Labor agreements and potential wage increases could affect margins. Delta announced a $1.4 billion profit-sharing payout for employees, one of the top 3 in its history, and a 5% pay increase in 2024.

Revenue Streams

Delta reported a December quarter pretax profit of $1.6 billion, marking the largest December quarter profit in its history, improving more than $500 million over last year.

Full year earnings per share of $6.16, with a return on invested capital of 13%, and free cash flow of $3.4 billion, a nearly $1.5 billion improvement over 2023.

Premium Services: Delta’s focus on premium seating (e.g., Delta One, Comfort+) and its strong brand loyalty. Premium revenue grew 8% over 2023, and total loyalty revenue increased by 9%.

Ancillary Revenue: Baggage fees, partnerships (e.g., American Express), and SkyMiles program performance.

International Travel: Recovery of transatlantic and Asia-Pacific routes post-pandemic. While premium revenue continues to grow, the main cabin has been under significant pressure and is seen as an area with potential for improvement.

Competitive Landscape

Pricing pressure from rivals like United and American Airlines. Delta announced partnerships with YouTube and Uber, and introduced Delta Concierge and Delta Sync to enhance customer experience.

Capacity management and route expansion strategies.

External Risks

Geopolitical tensions, health crises, or regulatory changes (e.g., sustainability regulations).

Delta noted a decline in sales due to the wildfires in Southern California, although it is not expected to have a significant impact on the quarter.

The wildfires in Los Angeles affected local demand, causing a temporary dip in sales.

Delta Air Lines (DAL) Price Target

Based on 15 Wall Street analysts offering 12 month price targets for Delta Air Lines in the last 3 months. The average price target is $73.80 with a high forecast of $100.00 and a low forecast of $46.00. The average price target represents a 90.65% change from the last price of $38.71.

Analysts in 2025 might focus on Delta’s ability to sustain pricing power, manage debt, and leverage its premium positioning.

Technical Analysis - Exponential Moving Average (EMA)

The airline industry, particularly sensitive to economic fluctuations, faced significant pressure as investors worried about the potential impact of reciprocal tariffs on consumer spending and travel demand. Delta, along with other major U.S. carriers, saw its shares slide as the market grappled with the implications of the new trade measures.

If we looked at how DAL stocks have been trading recently, RSI already showing very weak momentum now in the oversold region, and it could stay in the oversold for quite some time.

If we looked at the current stock price, it is near the low which was last recorded in early August 2024 where we have a major selloff, so we could still continue to monitor how DAL would continue to trade, because there is concern of consumer not spending money on travel.

Summary

I think we can continue to monitor how is the IATA reports and fuel price trends, and also how the tariffs impact would be like on DAL business.

I would be looking out for the stock price move, if DAL goes below the last low in Aug 2024, then it might be time to slowly add for this airline stock.

Appreciate if you could share your thoughts in the comment section whether you think DAL earnings guidance could be affected by tariffs impact.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.