Delta Airlines Inc. has caused a decline in airline stocks during premarket trades on Friday due to its lowered earnings guidance for 2024. Despite reporting a strong performance in both top- and bottom-line results for the fourth quarter, Delta's shares fell by 5.6% following the revision of its earnings outlook.
Delta President Glen Hauenstein attributed the anticipated decline in March quarter unit revenues to various factors, including a higher international mix, the normalization of travel credit utilization, and the comparison to a competitor's operational challenges from the previous year.
Delta's Revised Financial Projections for 2024
Delta now predicts earnings of $6 to $7 per share for 2024, falling short of the previously outlined target of over $7 per share that was presented at an investor day in December 2022. Additionally, the company expects an improvement in free cash flow for 2024, ranging from $3 billion to $4 billion, which represents an increase of up to $2 billion compared to 2023.
Delta's Expansion of Long-Distance Fleet
In addition to the lowered earnings guidance, Delta announced on Friday that it would be purchasing 20 Airbus A350-1000 aircraft for its long-distance fleet.
Impact on Other Airline Stocks
The news has had a ripple effect on other airline stocks as well. American Airlines Group Inc. and United Airlines Holdings Inc. have experienced declines of 4.7% and 4.6% respectively in premarket trades, while JetBlue Airways Corp. has seen a 2.3% decrease.
Related: Alaska Airlines Cancels Flights Due to 737 Max 9 Incident
Furthermore, Alaska Air Group Inc., which is currently dealing with the aftermath of a recent incident involving a blown-out panel on a 737-9 Max aircraft, has witnessed a decline of 2.7% in premarket trades.
Overall, the U.S. Global Jets ETF has also been impacted, decreasing by 2.8% in premarket trades.
While Delta Airlines Inc.'s financial projections have caused a temporary setback for airline stocks, the industry as a whole remains dynamic and is constantly adapting to changes in the market.