Delta Air Lines (DAL) shares surged by about 12% on Wednesday after the company posted stronger-than-expected first-quarter results. Also, investors cheered a sharp drop in oil prices following news of a two-week ceasefire between the U.S. and Iran.
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Q1 Earnings Snapshot
The airline reported Q1 revenue of $15.85 billion, topping Wall Street estimates of $14.82 billion and climbing 13% from the year-ago quarter. Also, earnings jumped 44% to $0.64 per share, well above the consensus estimate of $0.56.
Delta benefited from strong travel demand and tight cost controls. The airline also offset earlier fuel spikes with surcharges, higher fares, and a $300 million benefit from its own oil refinery, which helped protect margins even before oil prices dropped.
Investor sentiment improved further after management said travel demand remains strong heading into Q2. Delta expects low‑teens revenue growth next quarter and is forecasting $1 billion in pre‑tax profit.
Importantly, the refinery is also expected to deliver an even larger cost benefit in Q2, and Delta has already raised fares and bag fees to help cushion against future volatility.
Ceasefire Lifts Airline Stocks
The timing could not have been better. Just hours before Delta released its results, the U.S. and Iran agreed to a two‑week ceasefire that reopened the Strait of Hormuz, a key route for global oil shipments.
Crude prices immediately declined, with futures dropping more than 16%. The sudden relief in fuel costs sent airline stocks, such as United Airlines (UAL) and American Airlines (AAL), soaring across the board.
Even though fuel prices remain elevated compared to earlier in the year, the ceasefire-driven pullback eased immediate pressure on the industry.
Is DAL Stock a Buy?
Turning to Wall Street, DAL stock has a Strong Buy consensus rating based on 17 Buy and one Hold recommendations. The average Delta Air Lines stock price target of $80.53 implies an upside potential of 12.9%.
