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Delta Air Lines' Q1 Earnings Surpass Expectations, Goldman Sachs Upgrades to Buy

Market IntelThursday, Apr 10, 2025 6:06 am ET
1min read

Goldman Sachs has assigned a "buy" rating to Delta Air Lines (DAL.US), following the company's release of better-than-expected first-quarter results. The investment bank maintained a target price of $60 for the airline. Analysts Catherine O'Brien and Jack Ewell highlighted that Delta's performance exceeded expectations due to stronger-than-anticipated revenue and effective control over unit costs excluding fuel.

In response to the demand environment, Delta Air Lines has announced plans to reduce its capacity for the second half of 2025 and maintain a year-over-year capacity balance. This adjustment represents a 2.5 percentage point decrease from Goldman Sachs' current forecast for the second half of 2025 and a roughly 4 percentage point reduction from predictions made two weeks prior. The company has not yet disclosed its capacity guidance for the second quarter of 2025. However, assuming Goldman Sachs' forecast of a 3.5% increase holds, the new outlook for the second half of 2025 would result in overall capacity for the fiscal year being approximately 1 percentage point below the company's initial guidance range of 3% to 4% growth. Despite the reduction in capacity expectations, management anticipates that unit costs excluding fuel will experience a modest increase, aligning with initial projections.

Delta Air Lines' second-quarter revenue for 2025 is projected to change by -2% to +2% year-over-year, with the midpoint falling below market expectations and Goldman Sachs' estimates of +1.6% and +1.1%, respectively. Management noted that strong demand areas include premium products, loyalty programs, and international market revenue, while domestic and economy class revenue showed relatively weaker performance.

Goldman Sachs believes that Delta Air Lines' strategic adjustments and cost control measures will be beneficial in achieving higher returns in the current market environment. However, investors should remain cautious about potential risks, including macroeconomic pressures, order delivery risks, and fluctuations in business travel demand.

Delta Air Lines reported first-quarter revenue of $14.04 billion, a 2.1% increase year-over-year, surpassing market expectations. On a non-GAAP basis, earnings per share were $0.46, exceeding the market consensus of $0.39. While Delta still expects to be profitable in 2025, it has declined to reaffirm its January projection of adjusted earnings per share exceeding $7.35. The company stated that it will update its outlook as the year progresses.

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ServentOfReason
04/10
Anyone else think $DAL is the new king of cost control? Pretty slick with those unit costs.
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ButterscotchNo2791
04/10
$DAL trimming capacity, smart move in volatile skies.
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Lurking_In_A_Cape
04/10
Revenue projections underwhelming, but EPS beat is a win. Delta's got work ahead to hit full-year targets.
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Zurkarak
04/10
@Lurking_In_A_Cape True, Delta's got a long flight to full-year targets.
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cfeltus23
04/10
Delta's revenue bump looks short-lived, what's next?
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WickedWhizKid
04/10
@cfeltus23 What's your take on DAL's long-term growth?
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LividAd4250
04/10
Upgrading to $DAL feels right, but I'm watching macro risks like a hawk. Can't sleep on this one.
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Substance_Technical
04/10
Delta's Q1 earnings look solid, but that capacity cut's a game-changer. Bulls better factor that in. 📉💼
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enosia1
04/10
Premium demand is a silver lining for $DAL.
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Bothurin
04/10
@enosia1 Premium's carrying DAL, but watch economy dip.
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AdvantageNo3180
04/10
$DAL's strategic moves are solid, but I need to see more consistency before going heavy.
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LufaMaster
04/10
Goldman's call on $DAL feels right. Strong fundamentals, but watch for macro risks. Airlines are a rollercoaster.
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RhinoInsight
04/10
$DAL smashing Q1, but will they hold up with fuel costs creeping up? 🤔
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rubiyan
04/10
Delta's cutting capacity while Goldman says 'buy'—like a chef slashing ingredients after a rave review
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Bossie81
04/10
Watching $DAL like a hawk, but holding $AAPL long.
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Really_Schruted_It
04/10
$DAL trimming capacity? Smart move with fuel costs and macro uncertainty. Not a bad strategy to hedge bets.
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bnabin51
04/10
I'm holding $DAL long-term. Diversifying with $UAL, $LUV. Airlines need to adapt. Flexibility is key.
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Legend27893
04/10
OMG!Those $DAL whale-sized options block were screaming danger! � Closed positions just in time profiting more than $213
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statisticalwizard
04/10
@Legend27893 How long were you holding those DAL options, and what’s your plan now?
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