Delta Airlines Sees Record Revenues Boosted by Corporate and European Travel with Strong Dollar.

Delta Airlines was the first airline to report Q3 earnings on Thursday announcing record revenue from “tremendous demand” with the reemergence of corporate travel, offsetting soaring jet fuel expenses up 45% compared to 2019. DAL expects to run at 92% of the comparable 2019 capacity during the December quarter and set on fully restoring its network over the next six-to-nine months.

Delta Airlines Earnings

Q3 2022 earnings released at 6:15 a.m. ET; conference call at 10:00 a.m ET

  • Adjusted net income: $966 billion (including a $35 million impact from Hurricane Ian) vs $994 million expected. Down from a $1.5 billion profit three years earlier.
  • Adjusted earnings per share: $1.51 (including a 3-cent impact from Hurricane Ian) vs $1.54 expected
  • Revenue: $12.84 billion vs $12.83 billion expected
  • Delta’s fuel bill for the third quarter rose nearly 48% from 2019 to $3.32 billion.
  • Ex fuel, costs per available seat mile were up close to 23% from 2019 in the last quarter, partly increased because Delta didn’t fly as much.
  • Hired about 20,000 people since the start of 2021
  • Business bookings were 80% recovered to pre-pandemic levels at the end of the quarter and recent surveys show 90% of corporate accounts indicating that they will maintain or increase travel in the fourth quarter compared with the third.
  • Hurricane Ian cost it $35 million in revenue and had a 3-cent impact on adjusted per-share earnings.
  • $DAL Pre-market29.80+0.59 (2.02%)

“The travel recovery continues as consumer spend shifts to experiences and demand improves in corporate and international,” CEO Ed Bastian said in an earnings release.

The strong US dollar helped travelers. International travel, largely sidelined in 2020 and 2021, was a bright spot in the third quarter. Unit revenue growth outpacing domestic for the first time since the pandemic started, Delta said. Italy, Spain and Greece were popular destinations.

Outlook

DAL expects earnings per share of $1 to $1.25 in the fourth quarter, with revenue topping the same period of 2019 by 5% to 9%.

“Demand in the fourth quarter looks strong,” Bastian added. “The booking traction we’re seeing is consistent with the momentum we’ve built over the past three or four months.

Delta is upgrading its fleet domestically and internationally. During the third quarter, Delta entered a purchase agreement with Boeing to add one hundred 737-10 aircraft to its fleet, with delivery set to begin in 2025.

Delta Air Lines expects to run at 92% of the comparable 2019 capacity during the December quarter and set on fully restoring its network over the next six-to-nine months.

“I’m confident we can get there by next summer,” Bastian said “As we bring that additional capacity back, that’s going to help probably take a little bit of the pressure off of the pricing for consumers, but more importantly for Delta, it’s going to help us get much better cost productivity, and we’ll be able to pass some of that cost savings on to our customers.”

American Airlines reports its quarterly results next week. AAL raised its third-quarter revenue forecast on Tuesday. United Airlines is planning another big trans-Atlantic expansion for 2023, betting international travel will continue to rebound.

Source: Delta, IATA, TradersCommunity

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