Friday, October 22, 2021

Delta Air Lines will benefit as travel demand is stronger, but rising fuel prices will squeeze the 4Q bottom line

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Delta Air Lines Airbus A330neo or A330-900 aircraft departed from Amsterdam Schiphol AMS EHAM International Airport with a neo-engine version of the European aircraft manufacturer.

Nicholas Economy | NurPhoto | Getty Images

Delta Air Lines reported quarterly earnings on Wednesday and higher-than-expected earnings in the third quarter, but warned that rising fuel prices could put pressure on its bottom line despite improved travel demand by the end of 2021.

Atlanta Airlines said it expects revenue to recover slightly less than three-quarters of the $ 11.4 billion it brought in the same quarter of 2019, before the pandemic, in the last three months of the year. Judging by the assumptions of the average analysts compiled by Refinitive, this is how it worked:

  • Adjusted earnings for each share: 30 cents against the expected 17 cents.
  • Income: $ 9.15 billion, expected $ 8.4 billion.

Delta reported $ 1.2 billion in revenue from $ 9.15 billion in the third quarter, more than $ 8.4 billion more than analysts had expected. Its revenue fell 19% from 2019, although its first quarter was in black, excluding federal pandemic aid. Delta and other airlines compared 2019 to the year before the pandemic began.

The carrier said it expects its costs to rise from 6% to 8% before fuel consumption in the fourth quarter. Delta said it will fly 80 percent of its 2019 capacity, up from 71 percent in the last quarter.

Fuel prices are expected to rise from $ 1.97 to $ 2.25 to $ 2.40 per gallon in the third quarter.

“While demand continues to improve, recent increases in fuel prices will affect our ability to be profitable in the December quarter,” Delta CEO Ed Bastian said in an earnings report. “As the recovery process continues, I am confident that we will continue to provide a high level of service to our customers, strengthen our superiority over our own brand, and stabilize profitability.”

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