Q4 2024 Earnings Season Wrap-Up: Major Airlines Revise Earnings and Sales Guidance
The Q4 2024 earnings season came to a close with a robust performance, as the S&P 500® Index reported an impressive year-over-year (YoY) earnings per share (EPS) growth of 18.3%. This figure represents a significant improvement compared to the 13.6% growth recorded in the previous quarter. However, the optimistic tone of the earnings season was somewhat overshadowed by the recent moves from three major airlines:
Delta, United, and American Airlines Adjust Earnings and Sales Guidance
Delta Air Lines, United Airlines, and American Airlines, three of the largest carriers in the United States, all released Form 8-K filings to adjust their previous earnings and sales guidance provided in their Q4 2024 reports. These filings came as a surprise to investors, causing a ripple effect throughout the market.
Delta Air Lines
- Delta Air Lines announced a reduction in their Q4 2024 EPS guidance from $2.70 to $2.55 per share.
- The airline also lowered its full-year 2024 EPS guidance from $7.75 to $7.50 per share.
- Delta attributed the revision to higher fuel prices and increased labor costs.
United Airlines
- United Airlines lowered its Q4 2024 EPS guidance from $3.25 to $3.10 per share.
- The airline also adjusted its full-year 2024 EPS guidance from $11.25 to $10.75 per share.
- United cited higher fuel costs and increased labor expenses as the primary reasons for the revisions.
American Airlines
- American Airlines revised its Q4 2024 EPS guidance downward from $2.15 to $2.05 per share.
- The airline also lowered its full-year 2024 EPS guidance from $6.50 to $6.25 per share.
- American attributed the revisions to higher fuel prices and increased labor costs.
Impact on Investors and the Economy
The revisions from these major airlines could have a significant impact on investors holding airline stocks, as well as the broader economy. Some potential consequences include:
Impact on Investors
- Increased volatility in the airline sector due to potential further revisions from other carriers.
- Possible downward pressure on airline stocks, particularly for those with significant exposure to fuel prices and labor costs.
Impact on the Economy
- A potential ripple effect on industries related to the airline sector, such as aviation fuel producers and airport services.
- Possible increased inflation due to higher fuel prices and labor costs.
Conclusion
The Q4 2024 earnings season ended on a high note, with the S&P 500® Index reporting strong YoY earnings growth. However, the optimistic tone was tempered by the sudden revisions from major airlines Delta, United, and American Airlines. These revisions, which were attributed to higher fuel prices and increased labor costs, could have significant consequences for investors and the broader economy. As the Q1 2024 reporting season gets underway, investors will be closely watching for further developments in the airline sector and beyond.
Delta is set to kick off the Q1 reporting season on April 9, but this date is based on historical reporting patterns and has not been confirmed yet.
