Delta is raising its 2023 guidance as travel inventory increases

Delta Air Lines is raising its 2023 guidance after beating analysts’ expectations and travelers returning to the skies this holiday season.

In a press release issued by the Atlanta-based airline on Wednesday, Delta said it now forecasts a 7% to 8% jump in revenue for the quarter ended December, up from a previous forecast of 5% to 9%.

The airline also expects to generate more than $2 billion in free cash flow to allow for further debt reduction. Delta expects to halve leverage in two years – from 5x in 2022 to 2-3x in 2024.

The company also forecast adjusted earnings of between $1.35 and $1.40 per share for the last three months of 2022, an increase from its previously forecast range of $1 to $1.25.

Delta Air Lines 767-400

Delta Air Lines 767-400 (Delta Airlines)

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Meanwhile, 2023 adjusted EPS is expected to be in the range of $5 to $6 based on higher margins and a 15% to 20% increase in revenue over 2022.

Delta CEO Ed Bastian said in the release that air travel demand remains robust and Delta’s momentum is growing.

“Our 2023 outlook for revenue growth and margin expansion supports earnings per share nearly doubling to $5-$6 per share, keeping Delta on track to meet its 2024 earnings target of over $7 per share,” added Bastian.

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Delta also included a three-year financial outlook showing projected operating margin increases of 10% to 12% in 2023 and a range of 13% to 15% in 2024.

At the opening bell, shares of Delta were up about 3.02% after climbing nearly 0.55% over the past five days and 1.17% over the past month.

ticker security Last change change %
DAL DELTA AIR LINES INC. 34.31 +0.93 +2.79%
JBLU JETBLUE AIRWAYS CORP. 7:00 -0.10 -1.41%

Delta’s outlook contrasts with JetBlue’s.

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On Tuesday, the discount career announced that the expected very strong demand for December did not materialize. The expected increase was included in JetBlue’s earlier guidance, forcing the airline to adjust its forecast. JetBlue now forecasts revenue per available seat mile for the fourth quarter to come in at the low end of its previous guidance, up about 15% to 19% from 2019.

JetBlue said, “Underlying demand trends remain strong with healthy load factors and yields above 2019 levels for both low and peak travel seasons.”

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