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Delta Air Lines (DAL) Q4 Profit 21 g

A Delta Airlines plane landed from Los Angeles at Kingsford Smith International Airport on October 31, 2021 in Sydney, Australia.

James D. Morgan | Getty Images

Delta Air Lines said Thursday that the surge in the omicron variant of Covid-19 will result in losses in the first quarter, but it still expects travel demand to rebound and profit this year.

Delta posted the highest fourth-quarter revenue since the end of 2019, driven in part by higher vacation bookings and an increase in business travel. Sales of $ 9.47 billion beat analysts’ expectations of $ 9.21 billion. The company has yet to fully recover from the Covid-19 crisis. Revenue is down 17% from $ 11.44 billion in the last three months of 2019, just before the coronavirus pandemic began.

Delta shares rose 2.7% premarket after the company announced the results.

CEO Ed Bastian said omicron is expected to delay the recovery in travel demand by 60 days.

President Glen Howenstein warned: “The recent surge in omicron-related COVID cases is expected to impact the pace of demand recovery at the start of the quarter, with the pace of recovery resuming after President’s Day weekend.”

Here’s how Delta performed compared to what analysts expected, according to the median estimates compiled by Refinitiv:

  • Adjusted earnings per share: 22 cents versus the expected 14 cents.
  • Income: $ 9.47 billion against the expected $ 9.21 billion.

Delta reported a net loss of $ 408 million in the fourth quarter as fuel and other costs rose, in part due to disruptions due to the omicron spread. Adjusted for one-off items, Delta reported earnings per share of 22 cents, beating Wall Street’s expectations of 14 cents.

For the full year, Delta reported $ 280 million in profit for the first time in two years, thanks to $ 4.5 billion in federal assistance to pay airlines during the crisis. In 2020, following a drop in travel demand, Delta suffered the biggest loss ever: $ 12.4 billion.

Delta became the first US airline to report fourth-quarter results and to provide a detailed forecast of the impact of an option on its business. Omicron’s rapid expansion has affected industries such as theaters, restaurants, retailers and grocery stores.

Airlines, including Delta, have canceled thousands of flights since Christmas Eve as a surge in Covid infections among crews has led to staff shortages.

Delta said its operations have stabilized and that omicron has forced it to cancel only 1% of its flights in the past week.

But omicron will hold back orders in the near future, the airline said.

“Despite expectations of losses in the March quarter, we can still see significant gains in the June, September and December quarters, leading to significant profits in 2022,” Delta CFO Dan Yankey said in the income statement.

Investors largely ignored the omicron’s impact on telecom operators. Delta shares were up 3.9% this year to Wednesday, while United and American were up 6.3% and 3%, respectively. In comparison, the S&P 500 was down 0.84%.

Delta expects first-quarter revenues to be 24-28% below 2019 levels, with capacity 15-17% lower than it was three years earlier. He forecasts cost increases of about 15% over 2019, excluding fuel.

The airlines are comparing the results with 2019 to show how the business has recovered from pre-pandemic levels.

Delta and other airlines’ challenges this year include increasing recruitment to meet travel demand, a challenge in a tight labor market.

Delta executives will detail the results and their predictions for 2022 in a phone call at 10:00 am ET.

United Airlines plans to release results after the market close on Wednesday and American Airlines next morning.


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