Delta Air warns of pre-tax loss in fourth quarter as fuel prices surge

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Oct 13 (Businesshala) – Delta Air Lines Inc (DAL.N) missed Wall Street’s estimates for quarterly revenue on Wednesday and warned of a pre-tax loss for the fourth quarter due to a sharp rise in fuel prices.

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Oil prices have hit a multi-year high, threatening the pace of recovery in the airline industry. Fuel costs alone accounted for about 20% of Delta’s adjusted operating expenses in the third quarter.

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The carrier, however, expects to benefit from strong holiday demand and improved international and corporate travel as the United States redraws its borders in November to fully vaccinate passengers from 33 countries, including China and most of Europe. opens it.

“Going into 2022, investors are likely to consider the pace of the recovery in demand, particularly on the Trans-Atlantic Corridor, following recent crude oil price pressures,” Citi analyst Stephen Trent said in a pre-earnings note. balanced against.”

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The airline said third-quarter revenue from transatlantic travel was up 35% for the comparable period in 2019.

Delta, the first major US airline to report financial results, forecasts an adjusted fuel price per gallon between $2.25 and $2.40 for the fourth quarter. Adjusted fuel price per gallon was $1.94 in the latest quarter.

Adjusted operating revenue for the third quarter fell 34% from 2019 to $8.28 billion, as demand for the rapidly expanding Delta version of air travel cut through August and early September.

Analysts have estimated an average of $8.40 billion, according to Refinitiv data.

Net income fell to $1.21 billion, or $1.89 per share, in the three months ended September 30, from $1.50 billion, or $2.31 per share, in 2019.

Excluding items, the company earned $194 million, or 30 cents per share.

Reporting by Sanjana Shivdas in Bengaluru; Editing by Anil D’Silva

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