Three months ago, Delta Air Lines (NYSE:DAL) reported strong results for the first quarter and projected that the good times would continue in the second quarter. Delta's forecast called for adjusted earnings per share to reach a range of $2.05 to $2.35, up from $1.77 a year earlier.

On Tuesday, the airline told investors that results will come in near the high end of its guidance range for the second quarter. Delta's strong momentum also bodes well for its performance in the third quarter -- and beyond.

Delta reaches the high end of its forecast

In the first quarter, Delta Air Lines' revenue per available seat mile (RASM) increased 2.4%. The carrier expected similar trends in Q2, projecting a 1.5% to 3.5% RASM gain.

Now the airline giant says that RASM rose about 3.5% last quarter, reaching the high end of its guidance range. Delta increased its capacity 4.7% year over year -- slightly ahead of its initial forecast -- enabling the carrier to deliver revenue growth between 8% and 8.5% (also better than its original outlook). Adjusted nonfuel unit costs are still on track to rise 1% to 2%, while Delta revised its fuel cost guidance down to a range of $2.07 to $2.12 per gallon from $2.10 to $2.20 per gallon previously.

A Delta Air Lines plane parked on a tarmac.

Delta's unit revenue growth accelerated last quarter. Image source: Delta Air Lines.

The net result of all these changes is that Delta now estimates that it will post adjusted EPS between $2.25 and $2.35 for the quarter -- near the upper end of the range it provided in April. The midpoint of the new range would represent a 30% year-over-year EPS increase. It's also well ahead of the average analyst EPS estimate of $2.19.

Capitalizing on rivals' woes

One notable aspect of Delta's performance last quarter was that its load factor -- the percentage of seats filled with paying customers -- rose significantly. In the first quarter of 2019, Delta's load factor ticked down by 0.2 percentage points compared to the prior-year period. By contrast, the carrier's load factor increased by 0.7 percentage points in April, 1.3 percentage points in May, and 1.9 percentage points in June.

There is a pretty clear explanation for this trend. Delta is the only one of the top four U.S. airlines that didn't order the Boeing 737 MAX. The grounding of the 737 MAX has forced all of its biggest rivals to cut their capacity in recent months, pushing more travelers into Delta's arms.

Indeed, Delta's load factor actually decreased slightly in international markets, where the 737 MAX generally isn't used. Meanwhile, its load factor rose by more than 2 percentage points on domestic routes last quarter, reaching a practically unheard-of 90.9% in June.

This load factor growth played a big part in Delta's strong unit revenue performance last quarter. Additionally, the supply-demand imbalance clearly gave the carrier more pricing power.

The summer could be even better

Delta Air Lines will provide its initial outlook for the third quarter in its Q2 earnings release next week. Investors should expect another strong forecast.

First, it is clear that the 737 MAX won't be able to return until the late fall at best. Meanwhile, the capacity crunch at Delta's top rivals will get worse. They all expected to add more 737 MAX jets to their fleets over the past few months. They also have less flexibility to boost utilization to make up for a smaller fleet during the summer, when utilization would already have been high.

Second, Delta is on pace to see a much bigger benefit from lower oil prices in the third quarter than it did last quarter. (That said, oil prices have been volatile lately.) Delta's refinery should also post a sizable profit -- reducing Delta's net fuel bill -- due to the unexpected closure of a nearby refinery that suffered a major accident last month.

This favorable environment could potentially allow Delta Air Lines to post an even bigger profit in Q3. With the 737 MAX potentially grounded for most of the fourth quarter as well, Delta's momentum could continue, allowing the airline to far exceed analysts' full-year EPS estimates.

Of course, the 737 MAX won't stay grounded forever. But between fleet upgrades, other cost cuts, the global rollout of international premium economy seats, and the growth of its lucrative co-branded credit card program, Delta has plenty of other earnings growth drivers for the next few years. That makes the stock look like a terrific bargain at its current valuation of less than nine times forward earnings.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.