Delta Air Lines lowers 2024 earnings forecast, impacting airline stocks

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Delta Air Lines shares fell around 9% Friday after the firm cut its 2024 earnings prediction.
Delta Air Lines shares fell around 9% Friday after the firm cut its 2024 earnings prediction.

Delta Air Lines shares fell around 9% Friday after the firm cut its 2024 earnings prediction.

Earnings Outlook Adjustment:

Delta Air Lines has revised its full-year earnings per share forecast for 2024 to $6 to $7, down from the previous estimate of over $7 per share. 

The adjusted outlook has led to a decline in the stock prices of major airlines, including United, American, and Southwest. 

United and American experienced around a 10% decrease, while Southwest saw a decline of more than 4%.

Strong Quarterly Performance:

Despite the revised earnings forecast, Delta concluded 2023 with a robust performance, doubling its quarterly profit. 

The fourth quarter saw $2.04 billion in net income, a significant increase from the $828 million reported in the same period the previous year. Bookings for both corporate and leisure travel continued to rebound from pandemic lows.

Travel Demand Recovery:

Delta CEO Ed Bastian highlighted the airline’s recovery, stating that it has reclaimed nearly 90% of its pre-pandemic travel demand. 

He expressed optimism about the growth in international travel, with Americans showing interest in overseas destinations. 

Bastian anticipates a turning point in the first part of the new year, expecting positive trends in domestic unit revenues.

Market Impact and Stock Performance:

Delta’s strong performance in 2023, with shares surging more than 20%, contrasts with the adjustment in the 2024 earnings forecast. 

The stock, currently trading at $38.47 per share, is down from its all-time high of $63.16 in July 2019. 

The market response to the revised forecast highlights the ongoing challenges and uncertainties faced by the airline industry in the post-pandemic recovery.

Conclusion:

Delta’s adjusted earnings outlook for 2024 has influenced the broader airline market, underlining the sensitivity of investors to forecasts in the dynamic aviation industry. 

The company’s positive quarterly performance and CEO’s optimism about the future signal ongoing efforts to navigate the evolving landscape of air travel demand.

Gary Monroe

Gary Monroe is a seasoned contributor to the Los Angeles Business Magazine, where he offers insightful analysis on local business trends and economic developments. With a focus on Los Angeles' dynamic commercial landscape, Gary's articles provide valuable perspectives for entrepreneurs and business professionals in the city.

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