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Delta Air Lines Inc. (NYSE: DAL) fell more than 3% on Friday despite the company beating expectations for revenue and earnings for the fourth quarter of 2022. the first quarter of 2023. The stock has gained 15% year-to-date.
Quarterly performance
For the fourth quarter of 2022, Delta generated operating income of $13.4 billion on a reported basis, up 17% from the same period in 2019. Adjusted operating income was $12.2 billion, up 8% from Q4 2019. Top market beat market . forecast. The company posted adjusted EPS of $1.48, which was down 13% from Q4 2019 but ahead of consensus targets.
Trends
Delta saw strong demand through the fourth quarter resulting in domestic passenger revenue up 7% from the same period in 2019. International passenger revenue increased 5% during the 2019 quarter. In Q4, domestic corporate sales, including tickets sold to corporate contract customers, 80% recovered to 2019 levels. The company said that, according to a recent company survey, 96% of companies expect travel to remain the same or increase sequentially in the first quarter.
During the fourth quarter, total revenue per available seat mile (TRASM) increased 29% from the 2019 quarter. Passenger revenue per available seat mile (PRASM) increased 17%. Passenger load factor was 85%, down 1 point from 2019. Capacity down 9%. Non-fuel cost per available seat mile (CASM) was 13% higher than the 2019 period. Average fuel price per gallon was $3.28.
Moving to 2023, Delta sees an industry backdrop that is ideal for air travel. The momentum seen in the fourth quarter continues into the new fiscal year as demand trends remain strong. The company is confident that it will be able to finish building the network this year and drive more by reducing non-fuel unit costs by 2-4% annually. Average fuel prices per gallon are expected to be between $3.00-3.20 in FY2023.
Outlook
For the first quarter of 2023, Delta expects total adjusted revenue to rise 14-17% from the same period in 2019. Operating margin is expected to be 4-6%. The company estimates Q1 EPS between $0.15-0.40, which is lower than the consensus target of $0.55.
For FY2023, Delta expects total revenue to increase 15-20% year-over-year while operating margins are expected to be 10-12%. EPS is estimated to be between $5-6 for the year.
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