Delta and other airline stocks climb as the carrier reports huge demand for flights as fuel costs surge

• Delta stock surged Wednesday as the company said demand for flights is strong, helping to offset higher costs of jet fuel. 
• Demand in the first quarter was strong among spring break and business travelers as Omicron cases faded. 
• The company said it is ‘successfully’ recapturing fuel prices in the June quarter. 

Delta Air Lines jumped to a nearly two-month high Wednesday, leading a climb in shares of rival airlines after the carrier said it’s seeing strong demand for flights at a time of spiking fuel prices. 

Delta shares popped up 4.4% as regular-session trading got underway. The stock in premarket trade jumped as much as 7.1% to $41.40, the highest price since February 25.

The company in reporting its first-quarter results said consumer demand accelerated as decreasing cases of the omicron coronavirus variant prompted ticket purchases by spring break and business travelers. Office reopenings resulted in an improvement in business travel demand and a stronger fare environment, it said. 

Shares of other airlines advanced as well. American Airlines and United Airlines each rose by 4% and Southwest Airlines tacked on 3.5%. JetBlue Airways moved 1.8% higher. 

“As our brand preference and demand momentum grow, we are successfully recapturing higher fuel prices, driving our outlook for a 12% to 14% adjusted operating margin and strong free cash flow in the June quarter,” Ed Bastian, chief executive officer of Delta, said in the report. 

Delta’s jet fuel costs soared 33% in the first quarter to an average of $2.79 a gallon from the fourth quarter. It projected even fuel prices to keep climbing in the second quarter in a range between $3.20 and $3.35 a gallon. Prices for oil and other energy sources have broadly soared, contributing to a spike up in inflation rates. 

Delta is “successfully recapturing higher fuel prices” in the June quarter and it expects revenue recovery to accelerate to 93% to 97% with unit revenue up double digits compared with 2019, said Bastian. 

The company posted a first-quarter adjusted loss of $1.23 a share on revenue of $9.35 billion. A consensus estimate from Refinitiv called for an adjusted loss of $1.27 a share on revenue of $8.92 billion.