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Delta Airlines On Tuesday it raised its forecast for second-quarter and full-year adjusted earnings of $6 per share, at the high end of the estimates it provided last April, as strong demand for travel and swaps for more expensive price categories continues to drive growth.
Delta forecasts adjusted earnings per share of $2.25 to $2.50 for the second quarter, up from the previous range of $2 to $2.25 per share. CEO Ed Bastian said the company’s second-quarter earnings, which are set to report next month, could be its highest ever for the April-June period.
“Demand, as any traveler knows, is off the chain,” Bastian said in an interview on CNBC’s Squawk Box.
Shares of Delta rose 6.8% Tuesday to $46.09, the highest level in more than two years.
In a presentation to Investor Day Tuesday, the airline also raised its estimate for free cash generation this year to $3 billion from $2 billion. Delta redistributed its quarterly dividend earlier this month.
Delta and its competitors are reporting strong demand for travel, particularly for international flights, while other sectors are struggling while consumers grapple with inflation and other challenges. The airline industry also faced growth constraints due to lack of air traffic controllers, delays in new aircraft, and lack of new pilots, which helped stabilize prices.
But in addition to elastic demand, airlines are also enjoying jet fuel prices, which are down about 30% from a year ago.
Delta on Tuesday forecast that revenue per available seat mile, a measure of how much money the airline makes for the amount it flies, will rise as much as 18% year-over-year, up from a previous forecast of 15% to 17% growth.
The airline has repeatedly promoted customers’ willingness to buy more expensive seats, from extra legroom seats to first class. Premium revenue will be around $19 billion this year, accounting for 35% of total revenue, up from 24% in 2014.
The company also said its profitable partnership with American Express credit cards continues to grow, bringing in an estimated $6.5 billion this year compared to $4 billion in 2019.