Delta Air Lines (DAL) posted modestly weaker-than-expected third quarter earnings Thursday, thanks in part to $35 million hit from Hurricane Ian, but forecast robust gains over the final months of the year amid an ongoing surge in domestic travel demand.
Delta said adjusted earnings for the three months ending in September were pegged at $1.51 per share, up from just 30 cents over the same period last year but just shy of the Street consensus of $1.54 per share. Delta, however, said Hurricane Ian, which devastated the Florida Gulf coast in late September before moving north into Georgia and South Carolina, clipped around 3 cents from its adjusted bottom line.
Group revenues, Delta said, rose by around 40% to a record $12.84 billion, a figure that was largely in-line with analysts' estimates of a $12.88 billion tally.
Looking into the current quarter, Delta said its sees revenue growth of between 5% and 9% from 2019 levels, firmly ahead of Street forecasts, with earnings in the range of $1 to $1.25 per share.
"The travel recovery continues as consumer spend shifts to experiences and demand improves in corporate and international," said CEO Ed Bastian. "In this environment, we expect December quarter revenue growth to accelerate versus 2019 with an operating margin of approximately 10%."
"With strong demand and a return to best-in-class operational performance, we are ahead of our plan for the year on profitability and expect to be free cash flow positive," he added. "We're working towards full network restoration by summer of 2023, which supports a meaningful step up in profitability and cash flow next year on our path to earn over $7 of EPS and $4 billion of free cash flow in 2024."
Delta shares were marked 2.88% higher in early trading following the earnings release, against a 0.75% decline for the S&P 500, to change hands at $30.01 each.
Earlier this week, rival American Airlines (AAL) said it expects third quarter revenues to be firmly higher than pre-pandemic levels, as higher ticket prices look to offset a decline in overall flight capacity.
Total revenue per available seat mile for American Airlines, a key industry metric, is expected to rise 25% from 2019 levels, offsetting a 9.6% reduction in overall capacity, American Airlines said in an investor update ahead of its formal earnings release on October 20.
Last month, rival United Airlines Holdings (UAL) lifted its third quarter revenue growth forecast amid a big decline in jet fuel costs and improving travel demand.
United said it sees third quarter capacity trending "higher than originally expected" at levels that only 10% to 11% lower than in the pre-pandemic period of 2019.
Strong demand and more aggressive pricing, however, will mean operating revenues are likely to be 12% higher than in the third quarter of 2019, United Airlines said.
