Delta Air Lines, Inc. (NYSE:DAL) reported its Q1 results, with EPS coming in at ($1.23), compared to the Street estimate of ($1.27). Revenue was $9.3 billion, beating the Street estimate of $8.92 billion.

The company saw record results in Q1 in several key areas, including (1) the best cash sales month (March) in company history, outpacing its prior record from spring of 2019 despite offering 10% fewer seats, (2) positive monthly unit revenue for the first time in two years with PRASM up 1% and TRASM up 3% (vs. 2019), and (3) posted record co-brand acquisitions and co-brand spend under its AMEX SkyMiles credit card program and record cargo revenue.

Delta guided to a robust 12%-14% operating margin for Q2, which is 3 - 5 points below Q2/19 margin, despite a fuel price headwind that the analysts estimate could be as much as 8 - 10 points of margin.

Demand continues to show strength as consumers reallocate a greater portion of their spend from goods to services (as observed in recent publicly-available credit card data).

While the prevailing view in a rising fuel price environment is that low-cost carriers and ultra-low-cost carriers will see their cost advantage widen relative to higher-cost carriers, analysts at Deutsche Bank think that financial leverage and operating leverage also figure into an airline’s ability to withstand rapidly rising fuel prices.