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Delta Airlines (NYSE:OBTAIN) shares slid in premarket trading Friday after the carrier offered a lower-than-expected Q1 EPS guidance.
For the fourth quarter reported on Friday, the Atlanta-based airline posted adjusted earnings of $1.48. per share and $13.44, both beyond the consensus of analysts. The airline also recorded an adjusted operating profit margin of 11.6% for the quarter and $10.89 billion in passenger revenue, above consensus expectation of $10.6 billion.
CEO Ed Bastian commented: “As we move into 2023, the air travel landscape remains favorable and Delta is well positioned to deliver substantial earnings and free cash flow growth.” “We expect 2023 revenue to grow 15 to 20 percent and improve unit costs year-over-year, supporting our full-year outlook for $5 to $6 per share in earnings and helping us on track to achieve more than $7 in earnings per share by 2024.”
Those projections stand in contrast to consensus estimates currently set at $5.15 for 2023 and $6.76 for 2024.
That said, Chief Financial Officer Dan Janki noted that the March quarter could deliver a noisy start to 2023.
“For the third quarter, we expect non-fuel unit costs to grow 3% to 4% year-over-year, including the full-quarter impact due to increased labor costs and completion of construction. our network for the peak summer period,” he said.
Largely due to these effects, the EPS forecast of $0.15 to $0.40 for Q1 is far below expectations. Wall Street was anticipating a report of $0.64 for the March quarter.
Shares of Delta Air Lines (OBTAIN) embedded 5.3% in premarket transactions.
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