Delta Air Lines on Wednesday reported quarterly earnings and higher-than-expected third-quarter earnings, but warned that higher-cost fuel would impact its bottom line in late 2021 despite rising travel demand.
“We currently expect moderate losses in the fourth quarter,” CEO Ed Bastian said during a quarterly phone call with analysts on Wednesday.
The company’s shares fell more than 5% in day trading on Wednesday. American shares were down 3.4% and United more than 4%.
However, the Atlanta-based airline said it expects revenue to continue to recover over the last three months of the year, to just under three quarters of the $ 11.4 billion it generated in the same quarter of 2019 before the coronavirus. pandemic.
Delta’s $ 1.2 billion third-quarter profit, down 19% from 2019, was its second after the pandemic, but first without U.S. aid. Delta and other airlines have received billions of dollars in federal aid to keep them afloat during the crisis. Delta’s revenues of $ 9.15 billion also beat analysts’ expectations of $ 8.4 billion.
Customers were willing to pay for “premium” seats, which the company defines as everything from extra legroom on the bus to Delta One suites on long-haul flights, the carrier said. Delta said the percentage of customers paying for these seat types rather than upgrades was higher than in September 2019, but declined to provide more details.
Delta is the first US carrier to report third-quarter results, and investors are looking forward to how carriers are doing as Covid cases decline, but large corporate travel buyers continue to delay their return to the offices. The US, US and Southwest will release results next week.
In late summer, airlines warned that the delta variant of Covid-19 was affecting bookings, but said they had now stabilized. Bastian told CNBC’s Squawk Box on Wednesday that business travel is returning to half its 2019 level from 40%. in the third quarter.
The airline said it has hired 8,000 this year, and Bastian said in a quarterly analyst call that it will continue to add pilots, flight attendants and mechanics in 2022. Delta travelers faced long waits for customer service in the summer, and the carrier has pledged to add more staff to ease those bottlenecks.
Staff shortages have hurt airlines as travel demand has returned faster than expected. Last year, airlines urged employees to agree to a buyout or vacation, and thousands accepted their offer. About 20,000 employees left Delta during the pandemic, Bastian said.
Southwest Airlines said this week that staff shortages contributed to its weekend crash, forcing it to cancel more than 2,200 flights since Saturday.
Here are its results compared to the average analyst ratings compiled by Refinitiv:
- Adjusted earnings per share: 30 cents versus the expected 17 cents.
- Income: $ 9.15 billion versus the expected $ 8.4 billion.
A Delta Air Lines Airbus A330neo or A330-900 with the European aircraft manufacturer’s new engine option departs from Amsterdam Schiphol AMS EHAM International Airport.
Nicolas Economou | NurPhoto | Getty Images
The industry is comparing profits to 2019 before the pandemic.
Delta said it expects its expenses, excluding fuel costs, to rise 6-8% in the fourth quarter as flight volumes increase. The airline said it will use 80% of its capacity in 2019, up from 71% in the last quarter.
Fuel prices are expected to rise to $ 2.25–2.40, up from $ 1.97 a gallon in the third quarter.