U.S. airlines have no doubt been capitalizing on lower oil prices over the last couple of quarters. While you would hope that they would pass fuel savings onto customers, they haven’t, mostly because demand is still very strong and they don’t need to concede. Infact, flight prices have only increased! S&P 500 (SPY) airline profits are expected to expand 180% in the first quarter, with revenues much lower at 3%.

One name that will undoubtedly benefit is Delta Airlines (DAL), the country’s 2nd biggest carrier.  Estimize is looking for EPS of $0.54 when they report before tomorrow’s opening bell, a full $0.10 higher than the Wall Street consensus. Revenue expectations for $9.46B are also slightly higher than the Street’s $9.41B. Yet despite decent domestic travel and the benefit of lower gas prices, the company still has some hurdles to clear.

Deutsche Bank (DB) downgraded the airline earlier this month due to reduced international travel and of course, the strong dollar. Delta released some preliminary data on April 2 that showed unit revenue for Q1 decreased 1.5% year-over-year, as a result of currency headwinds as well as lower than expected domestic demand in March. With that said, many analysts still believe the benefit from lower fuel prices as well as the establishment of additional routes and increased capacity on planes may offset weakness.

Delta is the first of the S&P 500 airlines to report. We hear from Southwest Airlines (LUV) and American Airlines (AAL) on Thursday, April 23, as well as non-S&P 500 airlines JetBlue (JBLU), Alaska Air (ALK), and United Airlines (UAL).

(Photo Credit: Andrew W. Sieber)