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A Delta aircraft at the airline’s hangar in Atlanta.
Delta Air Lines is optimistic about its earnings for the upcoming fourth quarter, fueled by strong travel demand and robust year-end holiday bookings.
On Thursday, the Atlanta-based airline projected that its adjusted earnings per share (EPS) for the fourth quarter would fall between $1.60 and $1.85. This estimate exceeds Wall Street’s expectations of $1.71 according to LSEG and is a significant increase from the adjusted EPS of $1.28 reported in the same quarter last year.
However, Delta’s shares saw a decline of over 5% in premarket trading.
The company anticipates a revenue increase of 2% to 4% year-over-year, which falls short of analysts’ expectations for a 4.1% rise. Delta has cautioned that it expects a potential revenue dip around the U.S. presidential election on November 5, estimating a 1-point revenue hit due to anticipated lower travel demand in that period.
CEO Ed Bastian commented on the possible impact of the election, stating, “We do anticipate seeing a little choppiness around the election, which we’ve seen in past national elections. Consumers may take a brief pause before making investment decisions, whether they are discretionary or otherwise. Other industries are likely to notice this trend as well.” He did highlight, however, that holiday bookings remain exceptionally strong.
In the third quarter, Delta’s performance compared to Wall Street expectations was as follows:
Earnings per share: $1.50 adjusted vs. $1.52 expected
Revenue: $14.59 billion adjusted vs. $14.67 billion expected
Delta reiterated that the cybersecurity incident involving CrowdStrike in July resulted in a 45-cent impact on its adjusted earnings. Adjusted earnings sent out at $1.50 fell slightly short of analyst predictions, with the airline facing significant disruptions that led to thousands of flight cancellations. This incident cost Delta approximately $380 million in revenue.
Bastian has noted that Delta is pursuing compensation from CrowdStrike and Microsoft due to this disruption. He expressed his belief that the severity of the incident warrants full compensation, stating, “This matter is now in the hands of our attorneys. We hope for a resolution but are keeping all options open.”
On a positive note, Delta’s net income saw a 15% increase year-over-year, reaching $1.27 billion for the three months ending September 30. Total revenue rose by 1% to $15.68 billion, with passenger revenue remaining stable, while premium services such as first class continued to outperform the main cabin offerings.
Despite an oversaturated domestic market that has restrained airfare prices, Glen Hauenstein, Delta’s president, conveyed optimism regarding the airline’s future. He noted that “industry supply growth continues to rationalize, positioning Delta well for the final quarter of this year and into 2025.” The airline plans to increase its capacity by 3% to 4% during the fourth quarter.
Delta also maintains its projection for full-year adjusted earnings to be between $6 and $7 per share, excluding any effects from the CrowdStrike incident.
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