Delta, American, and rival airlines boost Q1 sales outlooks on strong demand; costs rise, too
Airlines are soaring as they say revenue is coming in higher than expected in the first quarter. That’s likely in part because they’re raising ticket prices to account for higher fuel costs.
Delta Air Lines shares rose Tuesday, following a boost to the company’s first-quarter sales guidance.
Speaking at a JPMorgan conference on Tuesday, Delta said it now expects Q1 revenue growth in the high single digits, up from its previous forecast of 5% to 7% growth. The company now expects Q1 revenue of up to $15.3 billion.
Rival carriers, also presenting at the conference, similarly boosted their revenue forecasts on stronger-than-expected travel demand in the quarter.
It’s worth noting that these are revisions to forecasts for the first quarter — of which roughly one-third is occurring during the war in the Middle East, which has driven oil costs sky-high and boosted ticket prices. According to a Deutsche Bank note from Monday, last week’s walk-up fares for Delta were up 20% year over year, while United’s were up 53.2%.
The airlines’ numbers likely also include a wave of people panic-buying tickets as they worry about prices rising in the future.
“Jet fuel, for those unaware, has almost doubled since the start of the year. So it’s not just the crude prices, but the cracks are also significantly higher than they were,” said Delta CEO Ed Bastian, who added that there’s been a “$400 million fuel spike just in the month of March.”
American Airlines said it now expects Q1 year-over-year sales growth of more than 10%, up from its prior guidance of 7% to 10%. The carrier also said its adjusted earnings per share will come in at the lower end of guidance, citing rapidly rising jet fuel costs.
JetBlue upped its operating revenue per seat mile outlook to between 5% and 7% for the first quarter, up from its prior range of 0% to 4%. According to JetBlue, demand helped to “partially offset additional expenses realized from operational disruptions and rising fuel costs.”
Budget carrier Frontier said revenue per seat mile is now expected to increase by the mid-teens, compared to its earlier guidance of more than 10%. The carrier said higher jet fuel prices will drive an additional $45 million to $50 million incremental fuel expense in the quarter.
Low-cost rival Allegiant said it expects first-quarter revenue to “more than offset higher fuel costs,” and raised its adjusted earnings-per-share outlook to between $3.25 and $3.75, up from the prior range of $2.50 to $3.50. The carrier raised its expected average fuel cost by $0.40 per gallon to $3.
Southwest Airlines and United Airlines, which are also set to present at the conference on Tuesday, were similarly up in premarket trading. This story will be updated as additional carriers present.
