Delta Air Lines issued a weak fourth-quarter earnings outlook amid expectations for subdued travel demand around the US Presidential elections in November, as the air carrier's bottom line fell short of market estimates in the prior three-month period while revenue beat Wall Street forecasts. The airline anticipates adjusted earnings to range between $1.60 and $1.85 per share for the ongoing quarter, it said Thursday.
The midpoint of the guidance range is below the current consensus on Capital IQ for $1.76. Revenue is forecast to grow by 2% to 4%. In premarket activity, the stock was down about 1%. President Glen Hauenstein stated, "We anticipate a one point impact to total unit revenue from reduced travel demand around the election." He also noted that bookings for the December quarter are "strong," while capacity growth is seen at 3% to 4%. Chief Executive Ed Bastian commented, "We expect our December quarter pre-tax profit to grow 30% over last year to $1.4 billion, which would mark one of the most profitable fourth quarters in our history." For the quarter ended on September 30, Delta's adjusted EPS dropped to $1.50 from $2.03 the year before, missing the Street's view for $1.53.
Operating revenue ticked up 1% to $15.68 billion, topping analysts' $15.29 billion estimate. Total passenger revenue remained nearly flat year-over-year at $13.11 billion, while cargo jumped 27%. The global tech outage in July caused by the update cybersecurity firm CrowdStrike deployed for its Falcon sensors on Microsoft Windows systems had a direct revenue impact of about $380 million in the quarter, Delta said.
The incident forced the carrier to cancel flights and refund customers, dragging down earnings by $0.45 a share. Total revenue per available seat mile declined 3.6% on an adjusted basis, impacted by the global tech outage. Domestic unit revenue decreased 3%, while the Atlantic, Latin America, and the Pacific dropped 2%, 6%, and 16%, respectively. "Through the September quarter, unit revenue growth improved sequentially in all geographic entities, reflecting an improved equilibrium between demand and supply as industry growth moderated," Hauenstein remarked. Operating expenses amounted to $14.28 billion, up from $13.5 billion in the prior-year quarter.
Non-fuel cost per available seat mile inclined 5.7% on a yearly basis..