Delta Air Lines (DAL) shares surged to $74 Wednesday on Q1 earnings beat: adjusted EPS of $0.64 vs. $0.57 consensus, with $14.2B revenue topping estimates.
Delta’s Monroe refinery provides a $300M Q2 benefit—a competitive hedge that most airlines lack.
Moreover, Delta’s premium revenue grew 14% YoY and American Express remuneration hit $2B (+10%).
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Delta Air Lines (NYSE:DAL) shares are up 13% in early trading Wednesday morning, recovering sharply after yesterday’s close of $65.62. The move comes despite a headline GAAP net loss and a fuel bill that would make most airline executives lose sleep. Here’s why investors are cheering anyway.
The paradox is real: Delta Air Lines posted a $289 million net loss and absorbed $2.591 billion in fuel expenses during the quarter. Yet, the stock already zoomed to $74 before the opening bell. The answer lies in what the adjusted numbers reveal about the underlying business.
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The GAAP loss was driven almost entirely by $550 million in mark-to-market investment losses, not operations. Strip those out, and you get a company that beat Wall Street on every metric that matters.
Delta Air Lines delivered adjusted EPS of $0.64, comfortably ahead of the $0.57 consensus estimate. That’s 44% higher than the same quarter a year ago, and it marks four consecutive quarters of beating consensus EPS estimates.
Adjusted revenue came in at $14.2 billion, topping the $14.11 billion Wall Street expected and growing 9.4% year-over-year. Delta’s premium revenue grew 14% year-over-year, loyalty and related revenue climbed 13%, and American Express (NYSE:AXP) remuneration crossed $2 billion, up 10% year-over-year.
CEO Ed Bastian is understandably confident:
“Delta’s results underscore the power of our brand and the durability of our financial foundation. We delivered earnings that were more than 40% higher than last year, even with a significant increase in fuel costs and operational disruptions across the industry.”
Jet fuel prices surged nearly 88% since late February, driven by U.S. and Israeli military action against Iran on February 28 that tightened the Strait of Hormuz and sent oil markets sharply higher. WTI crude oil peaked at $104.69 per barrel on March 30, up from roughly $66 per barrel in late February. That’s not a rounding error for an airline.
Delta Air Lines’ adjusted fuel expense rose 8% year-over-year in Q1 to $2.591 billion. For Q2, the company projects a fuel cost increase of more than $2 billion year-over-year, with an all-in fuel price of $4.30 per gallon. Bastian asserted, “The question of not just the day, of the month, is going to be how we navigate this higher fuel environment brought on by the Iranian conflict.”
Management isn’t waiting around. Delta Air Lines is cutting planned Q2 capacity growth by 3.5 percentage points, reducing flights in low-traffic markets and on midweek schedules, and raising checked bag fees to recapture costs. These moves signal a management team playing offense, not defense.
Here’s where Delta Air Lines’ story gets genuinely interesting. The company owns the Monroe refinery outside Philadelphia, acquired from Phillips 66 (NYSE:PSX) in 2012, which converts crude oil directly into jet fuel. That ownership acts as a natural hedge when fuel prices spike, and it’s paying off right now.
Delta Air Lines expects a $300 million refinery benefit in Q2 alone. Bastian acknowledged the uncertainty but leaned into the asset: “We don’t know where fuel is going to go, but to the extent fuel stays elevated, that refinery will continue to help us.” It’s the kind of vertical integration that most carriers simply don’t have.
Delta Air Lines guided Q2 revenue growth in the “low teens” percentage range, with an operating margin of 6% to 8% and adjusted EPS of $1 to $1.50. The company expects pretax profit of around $1 billion for the quarter, even with the fuel headwind. Crucially, Delta Air Lines maintained its full-year adjusted EPS guidance of $6.50 to $7.50, with Bastian saying simply: “We’re not walking it back.”
A secondary tailwind is lifting airline stocks broadly today. A recent Middle East ceasefire and Iran agreeing to reopen the Strait of Hormuz has pushed crude oil prices lower from their March highs, offering forward relief on fuel costs. That’s a meaningful shift in the macro backdrop for the whole sector. Investors watching United Airlines (NASDAQ:UAL) stock may find additional context in Wall Street’s $138.56 price target analysis published last month.
No matter how you slice it, today’s move reflects the market’s verdict: Delta Air Lines absorbed a brutal fuel environment, still beat estimates, maintained full-year guidance, and showed that its premium brand and refinery ownership give it tools most competitors lack. Watch for whether the gains hold into the close and whether the earnings call at 10:00 a.m. EST today adds color on demand trends heading into the summer travel season.
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