Delta Airlines On Thursday, third-quarter revenue was expected to hit a record high on strong summer travel demand, but its forecast fell short of analysts’ expectations as airlines Discounted Prices after flights flood the market.
Delta Air Lines expects sales growth this quarter to be no more than 4%, lower than the 5.8% growth forecast in an LSEG analyst survey, and expects adjusted earnings per share of $1.70 to $2, lower than analysts’ expectations of 2.05 per share. Dollar.
The Atlanta-based carrier kicked off airline earnings season Thursday Planes are full but profits are under pressure Increased capacity will impact fares and cost increases. The Transportation Security Administration said it screened more than 3 million people at U.S. airports for the first time on Sunday.
Delta Air Lines is a Stand out in the U.S. aviation industry As the most profitable airline, Thursday’s report suggested rivals, particularly those focused on the oversupplied U.S. air travel market, may be in trouble this summer.
competitors United AirlinesDelta Air Lines, which is due to report results next Wednesday, is trying to catch up with Delta Air Lines’ profitability, and the two airlines have been racing to add more premium seats to generate more revenue from consumers. Analysts have the highest buy ratings on Delta Air Lines and United Airlines compared to other U.S. airlines.
American airlines and Southwest AirlinesReported on July 25, per reduce Their revenue forecast second season. Airlines that lose money e.g. JetBlue Airways, Frontier Airlines and spirit airlines Their situation is even more difficult as they try to turn a profit in an oversupplied U.S. market.
Melius Research airline analyst Conor Cunningham said: “The reality is that Delta Air Lines’ financial position is still the best in the industry… which illustrates how bad the low end of the domestic market is right now.
Delta Air Lines shares fell 4% to $44.99 on Thursday, recovering from the day’s lows. Other major airlines also posted declines.
Here’s how Delta Air Lines performed second seasoncompared to Wall Street expectations based on LSEG consensus estimates:
- Adjusted earnings per share: $2.36 vs expected $2.36
- Adjusted income: $15.41 billion vs. $15.45 billion expected
Delta Air Lines’ adjusted revenue for the three months ended June 30 was $15.4 billion, a 5.4% increase from last year and lower than Wall Street’s expectations. Net profit fell nearly 30% from the same period last year to $1.31 billion, or $2.01 per share, and operating expenses increased 10% from last year. Adjusting for one-time items, Delta Air Lines reported profit of $1.53 billion, or $2.36 per share, in line with analysts’ expectations.
“The second quarter was very strong,” Chief Executive Ed Bastian said in an interview. “What you’re seeing is the impact of the domestic market on lower fare discounts for the season.”
According to the latest consumer price index released on Thursday, air ticket prices dropped 5.1% year-on-year and 5.7% quarter-to-quarter in June. Reduce inflation.
Bastian said demand will be better met by reduced U.S. industrial capacity in late summer. Delta Air Lines said business travel continues to increase and most customers expect to maintain or increase business travel spending this quarter and beyond.
The airline expects third-quarter capacity to increase 5% to 6% over last year, down from 8% growth in the second quarter. Bastian told CNBC he expects Delta’s September unit revenue to turn positive compared to last year.
American Airlines said in May that capacity would increase by 3.5% in the second half of the year, less than half the increase in the first half.
International travel revenue has been strong since the pandemic receded, even as airlines have expanded flight schedules, meaning more competition for customers. Delta Air Lines said the Paris Summer Olympics will lead to a 1 percentage point drop in unit revenue on transatlantic flights. Bastian told CNBC the impact was equivalent to about $100 million from June to August. Through its partnership with Air France, the airline has more capacity to the French capital than its competitors.
Delta Air Lines reported that premium fares (like first-class fares) rose 10% in the second quarter to $5.6 billion, while economy fare revenue rose 0.3% to about $6.7 billion. its profitable American Express Credit card transactions brought in $1.9 billion in revenue, up about 9% from last year.
Bastian said Delta is “pretty well” insulated from industry overcapacity because it generates most of its revenue from premium seats and other sources rather than standard economy tickets.
Delta Air Lines reiterated its full-year profit forecast of $6 to $7 per share and said it still expects to generate up to $4 billion in free cash flow.
Revealed: CNBC parent company NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. rights holder for all summer and winter Olympics through 2032.
