Delta Air Lines, Inc. ( DAL ) shares are trading lower by ~9% premarket on Thursday following the release of its second-quarter 2024 results.

Delta reported second-quarter 2024 operating revenue growth of 7% year-over-year to $16.658 billion, beating the consensus of $15.452 billion. Adjusted operating revenue was $15.407 billion (+5.4% YoY).

Adjusted average fuel price of $2.64 per gallon, up 5% from last year’s quarter. Adjusted EPS was $2.36, missing the consensus of $2.37.

Total passenger revenue was $13.841 billion, a 5% increase YoY; Cargo revenue grew 16% YoY to $199 million, and Other revenue was $2.618 billion (+19% YoY).

Delta recorded an adjusted operating income of $2.269 billion, compared to $2.494 billion YoY, with an adjusted operating margin of 14.7%, down ~230 bps.

“Diverse revenue streams, including premium and loyalty, contributed higher growth and margins, underpinning Delta’s industry-leading financial performance and increasing our financial durability,” commented Glen Hauenstein, Delta’s president.

“We expect September quarter capacity growth of 5 to 6 percent and revenue growth of 2 to 4 percent, with sequential improvement in unit revenue trends through the quarter,” added Hauenstein.

Adjusted operating expenses increased by 8% YoY to $13.138 billion, and non-fuel costs were $9.808 billion (+9% Y/Y) for the quarter.

Delta generated an adjusted operating cash flow of $2.458 billion (-7% YoY). Adjusted net debt at quarter-end decreased ~3% Y/Y to $19.17 billion. Adjusted debt to EBITDAR of 2.8x, down from 3.0x at the end of 2023.

Total revenue per available seat mile decreased by 1% year over year. The passenger load factor was 87% vs. 88% in the second quarter of 2023.

DAL’s Air Traffic Liability ended the quarter at $9.4 billion, up $2.4 billion compared to the end of 2023.

“Growth continues to normalize and our teams are consistently running a great operation, enabling us to deliver efficiency.  In the September quarter, we expect non-fuel unit costs to increase 1 to 2 percent year-over-year as capacity growth moderates,” commented Dan Janki, Delta’s chief financial officer.

“Debt reduction remains our top financial priority and we are progressing toward investment grade ratings, with gross leverage improving to 2.8x at the end of the first half,” added Janki.

Third-quarter 2024 Outlook: On a non-GAAP basis, Delta expects revenue growth of 2%-4%, EPS of $1.70 – $2.00 versus $2.06 consensus, and an operating margin of 11%-13%.

Reiterates 2024 Outlook: On a non-GAAP basis, DAL expects EPS of $6.00 – $7.00 versus the $6.58 consensus, free cash flow of $3 billion-$4 billion, and Adjusted Debt to EBITDAR of 2x – 3x.

Also Read: U.S. Airlines To Take Flight In Q2: Analyst Predicts Strong Results, 10% Operating Margin

Price Action: DAL shares are trading lower by 8.54% at $42.86 premarket at the last check Thursday.