US Markets
Thursday, October 12th, 2023 1:43 pm EDT
Key Points
- Strong Q3 Profit and International Travel Demand: Delta Air Lines reported a substantial increase in its profit, with a nearly 60% rise in the third quarter. This impressive performance was largely due to robust travel demand that persisted throughout the summer, particularly for international trips. The company experienced a notable 34% increase in revenue for trans-Atlantic flights during the third quarter.
- Earnings Forecast Adjustment: Despite the strong performance, Delta adjusted its full-year earnings forecast towards the lower end of a previous estimate. The airline now expects adjusted full-year earnings to be in the range of $6 to $6.25 per share, down from the previous estimate of $6 to $7 per share, primarily due to a surge in fuel prices. The company also reduced its free cash flow estimate for the year from $3 billion to $2 billion.
- Continued Travel Demand and Premium Seat Demand: Delta anticipates solid travel demand in the last three months of the year, expecting revenue to rise by 9% to 12% compared to the same quarter in 2022. Notably, the company has witnessed a significant increase in demand for premium seats, including business class and premium economy. Main cabin revenue and premium product sales both showed substantial year-over-year growth, with business travel recovering to more than 80% of 2019 levels. Delta has also hinted at making adjustments to recent changes in its frequent flyer program and airport lounge access policies due to customer feedback.
Delta Air Lines reported a nearly 60% increase in profit for the third quarter, driven by strong travel demand that persisted through the summer, especially for international trips. However, the airline revised its full-year earnings forecast to the lower end of its previous estimate due to a surge in fuel prices. Delta now anticipates adjusted full-year earnings of $6 to $6.25 per share, down from its earlier projection of $6 to $7 per share. The company also reduced its free cash flow estimate for the year from $3 billion to $2 billion.
Despite these adjustments, Delta expects robust travel demand in the last quarter of the year, forecasting a 9% to 12% increase in revenue compared to the same period in 2022. CEO Ed Bastian expressed confidence in these trends continuing. Delta’s third-quarter performance exceeded Wall Street expectations, with adjusted earnings per share at $2.03 (compared to an expected $1.95) and adjusted revenue at nearly $14.6 billion, a 13% increase year-over-year.
The strong performance in the third quarter was attributed to high demand for international travel, particularly trans-Atlantic flights. Delta’s planes operated at 88% capacity during the quarter, and the airline experienced a significant increase in demand for premium seats, such as business class and premium economy. Bastian also mentioned that business travel has recovered more than 80% compared to 2019 levels.
However, Delta faced some criticism from customers after announcing changes to its frequent flyer program and airport lounge access, which were seen as restrictive. Bastian acknowledged these concerns and hinted at forthcoming changes to address customer feedback.
For full original article on CNBC, please click here: https://www.cnbc.com/2023/10/12/delta-air-lines-dal-q3-2023-earnings.html
