Delta Air Lines (NYSE:DAL) is set to unveil its fourth-quarter 2023 financial results on January 12, before the market opens. Despite a positive earnings history, with three out of the last four quarters surpassing the Zacks Consensus Estimate (with one miss), concerns loom over the upcoming report, with an average beat of 4.35%. The Zacks Consensus Estimate for the fourth quarter has seen a 5.6% downward adjustment in the last 90 days.
Factors influencing Delta’s performance in the anticipated quarter include the impact of high fuel costs. With rising oil prices, the cost per gallon of fuel is expected to be significant, with Delta projecting an average fuel cost per gallon in the $2.90-$3.20 range. Analyst estimates align with this, predicting a cost of $3.03.
Furthermore, non-fuel unit costs pose an additional challenge for DAL, expected to remain flat or increase up to 2% from the fourth quarter of 2022. Elevated labor costs contribute to this uptick, with estimates indicating a 1.9% increase from the actuals of the same period in 2022.
Despite these challenges, buoyant air travel demand is anticipated to drive revenue growth. Passenger revenues are expected to see a 6% increase from the prior-year quarter, supported by a 14.5% improvement in capacity as Delta expands to meet rising demand.
However, concerns are underscored by Delta’s Earnings ESP of -1.88%, with the Most Accurate Estimate at $1.16 per share, two cents below the Zacks Consensus Estimate. Delta airline faces headwinds as it heads into the earnings announcement.
Reflecting on the third-quarter highlights, Delta reported earnings of $2.03 per share, beating the Zacks Consensus Estimate of $1.92 and showing a 35% improvement year-over-year. Revenues of $15,488 million surpassed the estimate of $15,290.4 million, reflecting an 11% YoY increase, driven by robust air-travel demand. Adjusted operating revenues, excluding third-party refinery sales, stood at $14,553 million, marking a 13% YoY increase.
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