A Delta plane in the airline's hangar in Atlanta
Leslie Josephs/CNBC
Delta Airlines expects an increase in profits in the fourth quarter, thanks to resilient travel demand and strong holiday bookings.
The Atlanta-based airline on Thursday forecast fourth-quarter adjusted earnings of $1.60 to $1.85 per share, compared with Wall Street estimates of $1.71, according to LSEG, and higher than the adjusted $1.28 per share that reported it a year earlier.
Delta shares fell more than 5% in premarket trading.
Revenue is likely to rise between 2% and 4% from a year earlier, although the airline warned it expects a 1-point drop in revenue due to lower demand before and after the November 5 US presidential election.
“We expect a bit of unrest around the election, as we saw in the last national election,” CEO Ed Bastian said in an interview. “Consumers, I think, are going to take a pause in making investment decisions, whether they're discretionary or other things. I think you'll hear other industries talking about that as well.”
He added that the number of holiday bookings is very high.
Here's how Delta performed in the third quarter, compared to Wall Street expectations based on LSEG consensus estimates:
- Earnings per share: $1.50 adjusted versus $1.52 expected
- Gain: $14.59 billion adjusted versus $14.67 billion expected
Delta reiterated that CrowdStrike's outage in July was a 45-cent hit to adjusted earnings, which came in at $1.50 per share, slightly below analyst estimates. Delta struggled to recover after the outage, which cost thousands of people Microsoft Windows machines taken offline, prompting the airline to cancel thousands of flights. The incident resulted in a $380 million loss of revenue, Delta said.
Bastian has said that Delta is seeking compensation from CrowdStrike and Microsoft for the outage.
“The devastation that has been caused, in my opinion, deserves full compensation,” he told CNBC. “This matter is now in the hands of our lawyers. We hope we will see a resolution, but we are keeping all our options open.”
Still, Delta's net income rose 15% from a year earlier to $1.27 billion in the three months ended September 30, while total revenue rose 1% to $15.68 billion. Passenger revenues were stable compared to last year, but revenue from premium offerings such as first class continued to outpace the main cabin.
An oversupply in the domestic market had kept airfares in check, but Delta's president Glen Hauenstein said the airline “continues to rationalize supply growth in the industry, positioning Delta well into the final quarter of the year and as we head into 2025 enter.” The carrier plans to expand capacity by 3% to 4% in the fourth quarter.
Delta said it still expects full-year adjusted earnings to be in the range of $6 to $7 per share, excluding the CrowdStrike impact.