Delta Air Lines (DAL) Stock Jumps After Earnings Beat as Iran Ceasefire Lifts Airlines

TLDR

• Delta reported Q1 adjusted EPS of 64 cents, beating the 58-cent estimate; revenue of $14.2 billion also topped expectations.
• DAL stock jumped ~13% in premarket trading, with rival carriers United, American, and Southwest rising 9–11%.
• Delta expects Q2 adjusted EPS of $1.00–$1.50, with the midpoint of $1.25 below the $1.41 analyst consensus.
• Fuel costs are set to rise by more than $2 billion in Q2, with jet fuel prices nearly doubling since late February due to the Iran conflict.
• Delta removed all planned capacity growth for Q2 and raised checked-bag fees to offset higher costs.

Delta Air Lines posted a stronger-than-expected first quarter, sending its stock sharply higher in premarket trading Wednesday. The results came alongside a U.S.-Iran two-week ceasefire announcement, which gave airline stocks an additional lift.

Adjusted earnings came in at 64 cents per share, ahead of the 57–58 cent consensus. Revenue of $14.2 billion also beat expectations. Rival carriers United, American, and Southwest rose between 9% and 11% in premarket on the back of the news.

Delta Air Lines, Inc., DAL

The Q2 outlook was more cautious. Delta guided for adjusted EPS of $1.00 to $1.50, with the $1.25 midpoint coming in below the $1.41 analyst average. The airline declined to update its full-year guidance, citing the uncertain fuel environment.

Jet fuel prices have nearly doubled since late February, driven by the Iran conflict. Delta expects to pay around $4.30 per gallon in Q2, adding more than $2 billion to its fuel bill versus the same period last year.

To cushion the blow, Delta is leaning on a few levers. Its own oil refinery is expected to deliver a $300 million benefit in Q2, up from roughly $60 million in Q1 as refining margins widened. CEO Ed Bastian said the airline aims to recover 40–50% of higher fuel costs through fare increases in the quarter.

Delta also raised checked-bag fees Tuesday, following similar moves by United and JetBlue. Bastian didn’t rule out the increases becoming permanent. “At this level of fuel, it’s hard to call anything temporary,” he said.

Capacity Cuts Take Shape

Delta removed all planned capacity growth from the June quarter, a cut of around 3.5 percentage points from its original plan. It added that its capacity growth plans now carry a “downward bias until the fuel environment improves.”

U.S. carriers broadly have reduced planned domestic capacity growth by more than half a percentage point since March 13. Delta’s refinery position and strong demand base put it in a relatively stronger position than peers to absorb the pressure.

Bastian said ticket sales rose at a double-digit pace year-on-year over the past month, with momentum continuing into Q2. Higher-income travelers in particular have shown no sign of pulling back.

Analyst Outlook Splits Widely

Full-year EPS estimates among analysts range from just 15 cents to $7.50, reflecting deep uncertainty around where fuel prices go from here. The consensus sits at around $5.40–$5.52, per LSEG and FactSet data.

JPMorgan took the most cautious view, slashing its estimate from $7.05 to just 15 cents. The bank’s analyst Jamie Baker said the team had “embraced” a full-year jet fuel assumption it doesn’t think higher fares can overcome — though JPMorgan maintained an Overweight rating on the stock.

UBS analyst Atul Maheswari held a Buy rating with a $5.12 EPS estimate, but noted he wouldn’t be surprised if Delta suspends its full-year outlook entirely.

In January, Delta had guided for full-year adjusted EPS of $6.50 to $7.50. Bastian declined to update that range Wednesday.

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