With earnings season nearly in full swing, it’s a thrilling time to be an investor. Companies are finally unveiling their 2022 Q1 results, and investors are laser-focused on how they have dealt with adversity brought about by supply-chain bottlenecks, rising energy prices, higher labor costs, and other economic restraints.

Delta Air Lines (DAL - Free Report) officially joined the earnings festivities with the release of its Q1 results on Wednesday. Rolling into next week, a few other airline companies – American Air Lines (AAL - Free Report) and United Air Lines (UAL - Free Report) – are slated to release quarterly results as well. Let’s take a dive into DAL’s Q1 results and utilize that information to get a feel for what could be coming for a few of its peers.

Delta Air Lines Q1 Results Top Estimates (DAL)

Delta Air Lines is a leader in domestic and international travel that offers airline tickets and flights to over 275 destinations on six continents. DAL shares have displayed a solid blend of defense over the last month, increasing by nearly 22% in value and outpacing the S&P 500.

2022 Q1 results were strong, topping both EPS and sales estimates. The airliner reported an EPS loss of -$1.23 per share, beating the Zacks Consensus Estimate of -$1.28 per share by a solid 4%. Furthermore, Q1 sales came in at $9.4 billion, beating the $9.1 billion estimate by 3.2% and reflecting a remarkable 125% year-over-year gain from 2021 Q1.

Consumer demand accelerated quickly throughout Q1, boosted by a strong spring break performance. Additionally, as the COVID-19 omicron variant faded away, offices reopened, and travel restrictions were lifted, resulting in a more robust fare environment and improved business travel demand for DAL.

Rising fuel costs have been a significant headache cutting into airliners’ margins in 2022. We can see this in Delta’s operating expenses; it has increased by a jaw-dropping 125% since 2021 Q1. The average fuel price per gallon, $2.09 in Q4 2021, soared to $2.78 per gallon for Q1 2022. Overall, total fuel expenses for Delta increased by 32% since its Q4 2021 report last December.

Looking ahead to Q2, Delta says, “In the June quarter, we are successfully recapturing higher fuel prices and expect our revenue recovery to accelerate to 93 to 97 percent with unit revenue up double digits compared to 2019."

All in all, it seems that Delta Airlines is optimistic moving forward, even in times of high fuel prices. As fuel prices spiral back down to earth and COVID-19 becomes less of an issue, the company seems poised to fly again, which bodes well for both investors and its peers.

Additionally, the Zacks Transportation – Airline Industry has gained nearly 19% over the last month, perhaps signaling that the rally has already taken flight. Delta Air Lines is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a B.

Delta Air Lines, Inc. Price, Consensus, and EPS Surprise

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Delta Air Lines, Inc. price-consensus-eps-surprise-chart | Delta Air Lines, Inc. Quote

American Air Lines Q1 Preview (AAL)

American Air Line is slated to release its next quarterly earnings on April 21^st before the market open. AAL shares have enjoyed a substantial 22% increase in value over the last month, providing a much higher level of defense and easily outperforming the S&P 500.

AAL has beat EPS estimates in each of its last four quarters, providing it with a four-quarter trailing average earnings surprise of 4.4%. In its most recent quarter, the airliner beat EPS estimates by nearly 6% and beat sales estimates by a marginal 1.2%.

Over the last 60 days, analysts have downwardly revised their Q1 estimates, causing the Consensus Estimate Trend to fall approximately 2% down to -$2.48 per share. On the contrary, three analysts have positively revised their estimates for Q1, but the majority (6) of revisions remain downward. Analysts see rising fuel costs negatively impacting the quarter’s results.

The Zacks Consensus Estimate of -$2.48 per share for Q1 reflects a notable 43% year-over-year increase in earnings from 2021. Moving onto sales, Q1 estimates look robust; the $8.8 billion quarterly revenue estimate represents a massive 120% surge in the top line year-over-year from 2021. Additionally, the current-year EPS estimate of -$3.48 reflects a substantial 60% growth in earnings year-over-year.

Sliding into its quarterly report next week, American Air Lines is a Zacks Rank #3 (Hold) with an overall VGM Score of an F.

American Airlines Group Inc. Price, Consensus, and EPS Surprise

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American Airlines Group Inc. price-consensus-eps-surprise-chart | American Airlines Group Inc. Quote

United Air Lines Q1 Preview (UAL)

United Air Lines is on deck to release its Q1 results before the market opens next Monday, April 20^th.  Over the last month, UAL shares have increased nearly 19% in value, scorching the S&P 500’s 5% gain.

UAL has a four-quarter trailing average EPS surprise of 16%, and in its latest quarter, the airliner torched the -$2.23 EPS estimate by nearly 30%. Additionally, the company beat the quarterly sales estimate of $7.9 billion by 3.3%, reporting sales of $8.2 billion.

For Q1, analysts have been peeling back their estimates over the last 60 days, sending the Consensus Estimate Trend down 6.3% and now forecasting quarterly earnings of -$4.11 per share. Out of the 13 revisions in this timeframe, 12 were downwards, and one was upwards. An unfavorable aviation environment in the recent term undoubtedly influenced analysts’ opinions.  

Year-over-year growth rates in earnings and sales look robust. The Q1 EPS estimate of -$4.11 reflects a notable 45% year-over-year increase from 2021, and the Q1 sales estimate of $7.7 billion represents a surge in revenue of nearly 140%. Additionally, the current year’s EPS estimate of -$2.49 displays a sizable year-over-year earnings growth of 82%.

Rolling into Q1, United Air Lines sports a Zacks Rank #3 (Hold) with an overall VGM Score of a B.

United Airlines Holdings Inc Price, Consensus, and EPS Surprise

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United Airlines Holdings Inc price-consensus-eps-surprise-chart | United Airlines Holdings Inc Quote

Final Thoughts

The airline industry has been haywire ever since the beginning of COVID-19. Travel restrictions have tanked results over the past two years, and recently, skyrocketing gas prices have thrown fuel on the fire.

However, the airline companies remain optimistic moving forward as COVID-19 moves to a more controllable state and fuel costs cool down following geopolitical issues out of their hands. Simply put, the industry is recovering.

Be on the lookout for these quarterly reports; DAL’s Q1 earnings report has sent shares into an uptrend, nearly gaining 15% this week alone. If UAL and AAL’s quarterly reports provide similar results, shares stand to take flight. 

DAL, AAL, UAL Performance

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Image Source: Zacks Investment Research