Strong Earnings and Higher Dividend Boosts Delta’s Second Quarter

To close out the week, Delta Airlines reported a record-setting second quarter that also beat Wall Street estimates, as earnings were boosted by stronger demand with the summer travel season now in full-swing. Accordingly, the Atlanta-based international airline reported an adjusted quarterly earnings of $2.35 per share on adjusted revenue of $12.49. This sets a new quarterly record at a time when the rest of the economy is slowing down. 

Analysts had originally expected adjusted quarterly earnings to reach only $2.27 per share on an adjusted revenue of $12.49 billion. 

Effectively, Delta reported revenue jumped 8.7 percent in the second quarter, with earnings soaring 32 percent from the same period last year.  Apparently, solid domestic load factor—a key measure of airline demand—bolstered results by skyrocketing a record 89 percent. 

All of this points to the airline boosting its full year guidance between $6.75 and $7.25 per share.  This is better than the estimated range of $6 to $7. In addition, the company also increased quarterly dividend, improving shareholder value by 15 percent, to 40 cents per share. 

In a news release, Delta president Glen Hauenstein commented, “With record passenger loads, customer satisfaction and $1 billion in revenue growth for the June quarter, demand for Delta’s customer-focused product and service has never been strong.  Our third quarter is off to a great start with a new highest revenue day on record July 7th.”

All of this is important because Delta had originally spent almost $500 million in combined dividends and share buybacks for this quarter. With this outstanding performance, the airline is set to return at least $3 billion to shareholders by the end of the year. 

Of course, the airline did cite a 10 percent increase in premium ticket revenue in the middle of double-digit percentage gains in revenue from both customer loyalty and third party maintenance.  And Delta plans to expand on this metric with a partnership with American Express that will have an estimated value of $7 billion by 2023. On the other hand, cargo revenue fell 17 percent for the quarter, mostly because of lower overall volume. 

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