Delta Air Lines (DAL) will report first quarter results on Wednesday morning at 7:00 and host a call at 10:00.
Last week, Delta reported March unit revenue, or PRASM (passenger revenue per available seat mile), grew 0.5% year-over-year. For the first quarter, unit revenue fell 0.5%, which was disappointing. In early March, Delta cut Q1 unit revenue guidance to flat from 0-2% growth. The company also lowered its operating margin guidance to 10-11% from 11-13%.
While first quarter unit revenue was light, investors remain hopeful for unit revenue to improve this year in the face of easy comps and capacity discipline across the sector.
Delta expects the year-over-year fuel cost headwind will peak in Q1 and expects margins to inflect in the second half of the year, when higher costs will be offset by higher unit revenue.
However, the second quarter is off to a rough start for Delta, who was still dealing with flight cancellations and delays over the weekend after a nasty storm in Atlanta threw a wrench in the company's' operation last Wednesday.
After preannouncing unit revenue and margins, first quarter results are fairly well known at this point.
Therefore, most of the focus will be on the second quarter outlook. Delta will offer second quarter unit revenue and operating margin guidance in its earnings release. Investors are expecting positive unit revenue in the second quarter.
Delta trades with an enterprise value just under 5x EBITDA estimates for fiscal 2017. This is roughly in-line domestic airline peers.