Delta's Stock Takes a Hit—Can Lower Oil Prices Fuel a Comeback?

Core Viewpoint - Delta Air Lines has experienced a significant decline in stock value due to lowered consumer and corporate confidence, leading to a drastic cut in Q1 2025 guidance, which has affected the entire airline industry [1][4][5]. Company Summary - Delta Air Lines reported Q4 2024 earnings of $1.05 per share, exceeding consensus estimates by$0.09, with revenue of $15.56 billion, surpassing expectations by over$1.2 billion [2]. - The company raised its Q1 2025 EPS guidance to a range of $0.70 to$1.00, with a midpoint of $0.85, compared to the consensus estimate of$0.77 [3]. - However, Delta issued a downside guidance for Q1 2025, reducing EPS expectations to $0.30 to$0.50, with a midpoint of $0.40, down from the previous estimate of$0.85 [4]. - Revenue growth expectations for Q1 2025 were cut from 7%-9% to 3%-4%, translating to $12.9 billion to$13.1 billion, down from earlier estimates [4]. - For the full year 2025, Delta anticipates EPS of at least $7.35, slightly below the consensus estimate of$7.44 [3]. Industry Summary - The airline industry is facing a collective downturn, with Delta's guidance cuts causing a ripple effect among peers like United Airlines and American Airlines [2][5]. - The first quarter is typically the weakest for demand, and recent events, including severe weather and aircraft accidents, have contributed to a short-term pullback in bookings [6]. - There have been 18 plane crashes in 2025, leading to a significant impact on consumer confidence and travel demand [7]. - Despite the challenges, Delta's CEO noted that oil prices have decreased, potentially saving the company $1 billion annually due to falling gas prices [8].