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Wall Street viewed Delta Air Lines Inc.’s quarterly earnings as “encouraging,” but investors likely will remain cautious as they sow doubt about current-quarter performance, and pin high hopes on a spring and summer travel recovery.
Delta
DAL,
earlier Thursday reported fourth-quarter adjusted profit and sales that topped analyst expectations, prompting the stock to rise and also lifting shares of other U.S. airlines, with American Airlines Group Inc.
AAL,
shares among the top gainers, up nearly 5%.
The U.S. Global Jets ETF
JETS,
was up around 3% in midday trading, contrasting with a loss for the S&P 500 index.
SPX,
American Airlines and other major U.S. air carriers are expected to report in the next two weeks.
Delta Chief Executive Ed Bastian did say omicron’s impact on air travel is expected to “temporarily delay the demand recovery 60 days,” with the airline remaining “confident in a strong spring and summer travel season with significant pent-up demand for consumer and business travel.”
Delta’s first-quarter sales outlook holds the line from the fourth quarter, which is important, but “this does reflect an assumption by Delta that recovery momentum resumes from Presidents Day weekend forward,” said Savanthi Syth, an analyst with Raymond James.
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“As such, we believe the report and outlook is encouraging but likely to be viewed with some caution by investors,” Syth said.
After “an expected, bumpy 60-day period” due to flight disruptions and omicron impacting demand, “Delta’s outlook after looks positive,” Stephen Trent with Citi said.
“Overall operational results looked good, with strong premium cabin- and co-branded card revenue offsetting some cost headwind,” he said.
March “will ‘make’ the current quarter as January is likely to be a difficult month given the continued impact of winter weather and the omicron variant,” said Helene Becker, an analyst with Cowen.
Delta said it was starting to see fewer sick calls this week among employees, signaling that perhaps the peak of employee illnesses is past, she said.
Airlines have canceled thousands of flights in recent weeks, hobbled by the impact of COVID-19 outbreaks and winter weather on already stretched schedules and capacity.
