Delta Air Lines posts profit thanks to stronger travel demand, but rising fuel prices will squeeze 4Q bottom line

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  • Delta’s third-quarter revenue and profit topped analysts’ expectations but were still below 2019 levels.
  • It was Delta’s first quarterly profit without taking into account federal aid since the start of the COVID crisis.
  • The airline expects fuel and other costs to rise in the fourth quarter.

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Delta Air Lines on Wednesday reported quarterly profit and higher-than-expected revenue for the third quarter, but warned that higher fuel costs could put pressure on its bottom line in late 2021, despite improving travel demand.

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The Atlanta-based airline said it expects revenue to continue to improve during the last three months of the year, slightly less than three-quarters of the $11.4 billion it brought in in the same quarter in 2019 before the pandemic. Here’s how it fared compared to average analyst estimates compiled by Refinitiv:

  • Adjusted Earnings Per Share: Expect 30 cents versus 17 cents.
  • Revenue: $9.15 billion versus expected $8.4 billion.

Delta posted a third-quarter profit of $1.2 billion on revenue of $9.15 billion, which exceeded analysts’ expectations of $8.4 billion. Its profit was down 19% from 2019, although it was its first quarter in the black without considering federal pandemic aid. Delta and other airlines have been comparing 2019 before the pandemic hit.

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The carrier said it expects fuel costs to rise 6% to 8% in the fourth quarter ahead of time as it flies. Delta said it would fly 80% of its 2019 capacity, up from 71% in the most recent quarter.

It expects fuel prices to rise from an average of $1.97 per gallon in the third quarter to $2.25 to $2.40.

“While demand continues to improve, the recent rise in fuel prices will put pressure on our ability to remain profitable for the December quarter,” Delta CEO Ed Bastian said in an earnings release. “As the recovery progresses, I am confident of our path to continued profitability as we continue to provide our customers with best-in-class service, reinforcing the preference for our brand, while providing a simple, make the airline more efficient.”

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