Delta Air Lines’ profit rose nearly 60% within the third quarter as strong travel demand continued through the summer, particularly for international trips, though the carrier forecast full-year earnings toward the low end of an earlier estimate after a jump in fuel prices.
In its quarterly report Thursday, Delta said it expects adjusted, full-year earnings of $6 to $6.25 a share, after forecasting $6 to $7 a share in July. Delta cut its free money flow estimate for the 12 months to $2 billion from the $3 billion it forecast in the summertime.
Delta said that it expects solid travel demand within the last three months of the 12 months, estimating revenue will rise 9% to 12% from the identical quarter of 2022, with per-share earnings of $1.05 to $1.30, consistent with estimates.
“We expect most of the same trends to proceed within the fourth quarter,” CEO Ed Bastian said in a CNBC interview.
An Airbus A330-323 aircraft, operated by Delta Air Lines.
Benoit Tessier | Reuters
Delta and other airlines trimmed their third-quarter forecasts in recent weeks due to a surge in fuel prices.
“Obviously there’s some short-term pressure on fuel as fuel rose quickly within the third quarter and stayed relatively high into the fourth quarter,” Bastian noted.
Here’s how Delta performed within the three months ended Sept. 30 compared with Wall Street expectations based on consensus estimates from LSEG, formerly often known as Refinitiv:
- Adjusted earnings per share: $2.03 cents vs. $1.95 expected.
- Adjusted revenue: $14.55 billion vs. $14.56 billion expected.
Delta brought in adjusted revenue of nearly $14.6 billion for the period, up 13% 12 months over 12 months and consistent with analysts’ expectations.
Net income for the period was $1.11 billion, or $1.72 per share, up 59% from $695 million, or $1.08 per share, through the same period a 12 months earlier. Adjusted for third-party refinery sales and other items, the corporate earned $2.03 through the quarter.
Delta and other global airlines have cited particularly strong demand for trips abroad, with trans-Atlantic travel a standout. The Atlanta-based carrier reported revenue for those flights was up 34% within the third quarter compared with last 12 months.
Delta’s planes flew 88% full within the quarter, up 1 percentage point from the year-earlier period, despite additional capability each domestically and internationally. Unit revenue from passengers fell 1.5%, 12 months over 12 months. Airfares have dropped in recent months as airlines grew their schedules.
Along with a surge in international trips, the carrier has said it has seen a pointy increase in demand for premium seats, like business class or premium economy. Most important cabin revenue got here in at $6.62 billion, up 12% on the 12 months, while premium product sales rose 17% to $5.11 billion, Delta said.
“I do know the lower-fare airlines are having some challenges but our premium product, especially domestically is doing very, thoroughly,” Bastian said within the interview. He added that business travel is greater than 80% recovered to 2019 levels.
Nevertheless, Delta President Glen Hauenstein said Thursday on an earnings call that the Hollywood and autoworkers strikes have hurt demand from those sectors.
Delta has a greater than 70% market share in Detroit and nearly 20% at Los Angeles International Airport, probably the most of any carrier.
Delta got here under fire from customers last month when it announced it will make it harder to earn elite frequent flyer status and said it can cut back access to its popular airport lounges after travelers experienced long entry lines. Weeks later, Bastian said the carrier would make changes to those latest policies, which he said may need gone “too far.”
Bastian declined to offer details but said changes might be announced within the “coming days.”
“Customers almost universally understand we needed to do something given the numerous demand for our premium assets,” he said.
United Airlines and American Airlines are scheduled to report third-quarter results next week.
