delta airlines Although the company missed Wall Street’s profit expectations and lowered its full-year earnings forecast Friday, CNBC’s Jim Cramer said the results were an encouraging sign that the company is becoming more resilient.
“Delta Airlines is putting up incredible numbers that will offset a significant portion of the increase in fuel costs,” the “Mad Money” host said. “When oil prices come back up, I think they will fight like bandits.”
The company reported adjusted earnings per share of $1.72, lower than analysts’ expectations of $1.75, and lowered its full-year profit forecast as jet fuel costs rose 60% from a year earlier due to the impact of the Iran war. But Kramer focused on what’s been lost in the headline numbers. In other words, Delta Air Lines was able to keep its adjusted pretax profit roughly flat despite sharp increases in expenses.
“It’s unbelievable,” Kramer said. “Delta Airlines was able to generate enough additional revenue to offset most of the losses.”
The big bright spot was premium travel. Premium seat revenue increased 18%, outpacing main cabin ticket revenue. Delta Air Lines accounted for a larger share of premium seats even though it charged higher fares.
“Delta added premium capacity, filled more capacity, and also charged more,” Cramer said. “This is the best kind of request, and it’s proven to be pretty persistent.”
The growth of the company’s loyalty business is also a source of strength. revenue from it american express Partnerships increased by 15%, allowing Delta to generate more revenue than traditional ticket sales.
For Kramer, these trends strengthen his thesis that Delta Air Lines is evolving beyond a traditional cyclical airline into a more durable business built around loyal customers, premium service and diverse revenue streams.
He also sees an eventual fall in fuel prices as a key factor. Delta Air Lines has been raising fares to offset higher costs, but there has been limited resistance from customers. “If the war with Iran ends, or at least there’s a ceasefire until oil prices fall, this airline will be printing money,” Cramer said.
Still, as fuel prices continue to rise, Cramer is in no rush to buy airline stocks. But he remains optimistic about Delta’s long-term prospects.
