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

Earnings

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Delta Air Lines Airbus A330neo or A330-900 aircraft with neo engine option of the European plane manufacturer, as seen departing from Amsterdam Schiphol AMS EHAM International airport.
Nicolas Economou | NurPhoto | Getty Images

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

The Atlanta-based airline said it expects revenue to continue to recover during the last three months of the year, to a little bit 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 performed compared with average analysts’ estimates compiled by Refinitiv:

  • Adjusted earnings per share: 30 cents versus 17 cents expected.
  • Revenue: $9.15 billion versus $8.4 billion expected.

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

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

It expects fuel prices to rise to $2.25 to $2.40, from the average $1.97 a gallon in the third quarter.

“While demand continues to improve, the recent rise in fuel prices will pressure our ability to remain profitable for the December quarter,” Delta’s CEO Ed Bastian said in an earnings release. “As the recovery progresses, I am confident in our path to sustained profitability as we continue to provide best-in-class service to our customers, strengthen preference for our brand, while creating a simpler, more efficient airline.”

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