Wednesday, June 29, 2022

Delta Air Lines predict a profitable Q3

Delta Air Lines expects capacity for the last three months of the year to reach approximately 80 per cent of the 2019 level, a jump from the third quarter, when the carrier flew 71 per cent of 2019 capacity, according to a PhocusWire report.

However the airline doesn’t expect its European capacity to return until next spring and summer, when the transatlantic flying season normally peaks.

Speaking during the carrier’s earnings call, CEO Ed Bastian said that Delta expects revenues for November and December to reach 75 per cent of the 2019 level compared to this month’s revenue expectation of 65 per cent of 2019.

The company’s optimism comes following the U.S. reopening to international travelers in November and a rise in business travel bookings as the number of new COVID-19 delta variant cases recedes.

Last week, Bastian said, business travel bookings were approximately 50 per cent of 2019 levels, the best result since the start of the pandemic, and up 10 percentage points from results over the past several months, when business bookings have been approximately 40 per cent of 2019.

“There is a clear underlying momentum in our company, which gives us optimism going into 2022,” the CEO said.

Delta’s first profit since start of pandemic

Delta reported net income of $1.2 billion for third quarter while reporting its first quarterly profit since the start of the pandemic, even when federal payroll grants are excluded from the revenue line. Delta’s adjusted net income for the third quarter was $194 million.

The carrier is projecting a modest fourth-quarter loss due to fuel costs that it expects to increase by more than 40 cents per gallon compared to the third quarter.

Delta reported operating revenue of $9.15 billion for the third quarter, exceeding analyst expectations by $690 million, according to the investment website Seeking Alpha. Revenues were 63% of the 2019 level on the strength of what Bastian called a full recovery in domestic travel, as well as remunerations of more than $1 billion from credit card partner American Express, a figure that exceeded the total for the third quarter of 2019 by 1 per cent.

Weak international and business revenue, however, stymied further recovery.

With Southwest’s weekend operational collapse, in which it canceled about 2,500 flights over four days, having dominated airline industry headlines in recent days, Bastian emphasized Delta’s strong summer operational performance.

In August, Delta and its Delta Connection-marketed regional partners completed 99.7 per cent of scheduled flights. So far this year, the Delta network has had 116 no-cancellation days.

The carrier also reported that 90 per cent of employees are vaccinated against COVID-19 and expects to reach a vaccination rate of 95 per cent by November.

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