Summary

  • Delta Air Lines posted record-breaking Q2 revenues in Q2 2024, yet the airline’s cost growth outpaced revenue growth.
  • Its net profit was also 11% lower, with the airline’s president promising that capacity growth would decelerate going forward.
  • Delta Air Lines has kept its full-year guidance that it initially presented during its Q1 2024 results announcement.

Delta Air Lines has announced its latest Q2 2024 results, delivering record-breaking Q2 revenues and a net profit. However, year-on-year (YoY), its quarterly net profit plummeted by nearly 11%, with cost growth eclipsing revenue increases compared to the same quarter a year prior.

Decelerating capacity growth

In his opening statement, Glen Hauenstein, the president of Delta Air Lines, remarked that peak summer travel demand has remained strong and consistent with the airline’s guidance, it delivered record Q2 revenues, increasing by 5.4% YoY.

“Diverse revenue streams, including premium and loyalty, contributed higher growth and margins, underpinning Delta’s industry-leading financial performance and increasing our financial durability.”

Hauenstein added that with Delta Air Lines’ international and domestic hubs approaching a complete recovery compared to pre-pandemic levels, it will begin retiring aircraft at a normal rate once again. As a result, the airline’s capacity growth will slow, and as such, its Q3 capacity should grow 5% to 6% YoY, resulting in revenues growing by between 2% and 4% YoY.

A Delta Air Lines Boeing 767-300 taking off

Photo: Wenjie Zheng | Shutterstock

Commenting on the airline’s financial performance, Dan Janki, the chief financial officer (CFO) of Delta Air Lines, remarked that the carrier hit the midpoint of its Q2 guidance with earnings per share (EPS) of $2.36 per share.

Janki added that the airline’s operational excellence drove an incremental point of capacity growth and unit cost favorability, with non-fuel unit costs rising by only 0.6% YoY. Looking forward, Janki expected that Delta Air Lines’ non-fuel unit costs would grow by 1% to 2% YoY in Q3.

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Costs outpacing revenues

Nevertheless, Delta Air Lines ended the second quarter of 2024 with adjusted revenues of $15.4 billion, or 5.4% more than in Q2 2023. However, with adjusted operating costs rising to $13.1 billion (an increase of 8% YoY), its adjusted operating margin dropped to 14.7%, compared to 17.1% during the corresponding period in 2023.

Still, the airline ended the quarter with a net profit, with an adjusted net income of $1.5 billion, or $195 million fewer than in Q2 2023, a decrease of 11%. Adjusted non-fuel costs and fuel-related expenses rose by 9% and 12%, respectively, Delta Air Lines’ latest quarterly financials showed.

N813NW Delta Air Lines Airbus A330-323 in sky

Photo: Vincenzo Pace | Simple Flying

Its premium products have continued to drive up the airline’s revenues. With the carrier’s unaudited, meaning unchecked, passenger revenues being $13.8 billion, 40.5% of this income came from its premium products, or $5.6 billion. The premium cabin-related passenger revenues grew by 10% YoY, while main cabin ticket revenue was pretty much flat, increasing by $22 million.

The remaining unaudited passenger revenues came from loyalty travel awards ($975 million), while travel-related services brought in another $517 million. Overall, its unaudited passenger revenues grew by 5% YoY.

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Sticking to its full-year guidance

Despite some worrying signs, including dipping profits despite Q2 being one of the two peak quarters during the year, Delta Air Lines has stuck with its initial full-year guidance, which it issued when it announced its Q1 2024 results in April 2024.

N182DN Delta Air Lines Boeing 767-332(ER) at JFK

Photo: Vincenzo Pace | Simple Flying

Reiterating the guidance, the airline estimated that its EPS would be in the range of $6 to $7, with a free cash flow of between $3 billion and $4 billion, while its adjusted debt to Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) would be from 2x to 3x.

Meanwhile, its Q3 2024 guidance estimated that Delta Air Lines’ revenues during the quarter would climb from 5% to 7%, with an operating margin of 14% to 15%. Lastly, its quarterly EPS should be in the $2.20 to $2.50 range.

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