Delta Air Lines on Wednesday reported a quarterly profit and higher-than-expected revenue for the third quarter, but warned that more expensive fuel will pressure its bottom line in late 2021 despite improving travel demand.
The Atlanta-based airline said it expects revenue to continue to recover during the last three months of the year, to a little bit less than three-quarters of the $11.4 billion it brought in the same quarter in 2019, before the coronavirus pandemic. The company’s shares were down nearly 4% in early trading Wednesday.
Delta’s third-quarter profit of $1.2 billion, which was down 19% from 2019, was its second profit since the pandemic but the first one without U.S. aid. Delta and other airlines received billions of dollars in federal assistance to keep them afloat during the crisis. Delta’s revenue of $9.15 billion also exceeded analysts’ expectations of $8.4 billion.
Airlines warned in late summer that the delta variant of Covid-19 was weighing on bookings but said they have now stabilized.
Delta’s CEO, Ed Bastian, told CNBC’s “Squawk Box” on Wednesday that business travel is returning, up to half of 2019 levels from 40% in the third quarter.
The airline said it has hired 8,000 people so far this year. Delta travelers faced long wait times for customer service over the summer and the carrier vowed to beef up staffing to ease those bottlenecks.
Understaffing has hurt airlines since travel demand has returned faster than expected. Last year airlines urged employees to accept buyouts or leaves of absence and thousands took them up on the offer.
Southwest Airlines this week said staffing shortages contributed to its meltdown over the weekend that forced it to cancel more than 2,200 flights since Saturday.
Here’s how it performed compared with average analysts’ estimates compiled by Refinitiv:
- Adjusted earnings per share: 30 cents versus 17 cents expected.
- Revenue: $9.15 billion versus $8.4 billion expected.
Delta Air Lines Airbus A330neo or A330-900 aircraft with neo engine option of the European plane manufacturer, as seen departing from Amsterdam Schiphol AMS EHAM International airport.
Nicolas Economou | NurPhoto | Getty Images
The industry has been providing earnings comparisons to 2019, before the pandemic hit.
Delta said it expects its costs, before fuel expenses, to rise 6% to 8% in the fourth quarter as it ramps up flying. The carrier said it would fly 80% of its 2019 capacity, up from 71% in the most recent quarter.
It expects fuel prices to rise to $2.25 to $2.40, from the average $1.97 a gallon in the third quarter.
“While demand continues to improve, the recent rise in fuel prices will pressure our ability to remain profitable for the December quarter,” Bastian said in an earnings release. “As the recovery progresses, I am confident in our path to sustained profitability as we continue to provide best-in-class service to our customers, strengthen preference for our brand, while creating a simpler, more efficient airline.”
This article first shown on CNBCSource link Author on date 2021-10-13 14:05:49