Delta Air Lines (DAL) stock rose on Tuesday morning as the carrier raised its current quarter revenue guidance despite the ongoing negative effects of the US-Israel war against Iran.
Ahead of a presentation at the JPMorgan Industrials Conference, Delta raised its first quarter revenue guidance growth to approximately 7% to 9% from its initial forecast of 5% to 7% year over year.
Delta rival American Airlines (AAL) also upped its revenue guidance ahead of the conference.
Delta stock rose 5% in early trade, with the sector also rising on the updated guidance.
Read more about Delta’s stock moves and today’s market action.
In its presentation, Delta said “consumer and corporate trends” accelerated in March, with strength across its main, premium, and loyalty segments. Delta added that both domestic and international business were growing “mid-single” digits year over year.
Delta said the airline was “moving quickly” to recapture higher fuel costs, with capacity flexibility in place if elevated fuel prices remain.
Read more: How oil price shocks ripple through your wallet, from gas to groceries
The Iran war and de facto closure of the Strait of Hormuz have sent oil prices surging since the attacks began, with jet fuel prices in California doubling in recent days.
Broader markets continue to navigate the risks of the Middle East conflict, which shows no sign of abating. Iran kept up its strikes on energy infrastructure, setting a huge UAE gas field ablaze. Meanwhile, large quantities of air traffic heading in and out of the Middle East have been diverted or canceled due to the ongoing conflict, with the UAE briefly closing its airspace earlier Tuesday due to a drone threat.
Delta is betting its operational excellence and strong travel demand will help blunt the effect of fuel prices, a major expense for airlines.
“The higher revenue is offsetting the cost of not just the fuel, but we’ve also had a pretty tough winter season in terms of storms,” Delta CEO Ed Bastian told CNBC in an interview Tuesday morning. “So you put that all together, we’re expecting to come in within the original guidance of 50 to 90 cents EPS,” Bastian added on the profitability end.
In its presentation, Delta said it captured 55% of total industry earnings last year, with premium revenue more than doubling in 10 years to $22 billion, and its highly profitable American Express credit card remuneration is on target for its $10 billion goal.
Investors will get full first quarter financials in mid-April, when Delta is expected to post results.