Delta Air Lines Earnings Guidance Misses Expectations

Investing.com — Delta Air Lines (NYSE:DAL) has unveiled its current-quarter earnings guidance, which fell short of analysts' expectations. The US carrier is dealing with the aftermath of a summer outage of its computer network and pricing pressures resulting from overcapacity.

The company now forecasts fourth-quarter adjusted earnings per share between $1.60 to $1.85, lower than Wall Street's estimate of $1.78 at the midpoint, as reported by Bloomberg News.

Total revenue for the quarter is projected to increase by 2% to 4%, with Delta President Glen Hauenstein commenting that industry supply growth trends are continuing to “rationalize.” Investors have been closely monitoring the overcapacity situation at Delta and its competitors, which has negatively impacted fare pricing.

Despite strong holiday bookings, Hauenstein indicated that Delta anticipates a 1 percentage point decline in demand due to reduced travel activity surrounding the upcoming US election.

Following the announcement, shares of Atlanta-based Delta fell during premarket US trading.

In July, Delta experienced a significant system-wide failure due to a faulty update from CrowdStrike (NASDAQ:CRWD), leading to a wave of flight cancellations—specifically, about 7,000 flights over five days. The financial repercussions of this incident were around $380 million, largely due to customer refunds in cash and frequent flyer miles. Non-fuel expenses reached $170 million, while fuel costs were $50 million lower than expected if the flights had not been canceled.

The outage also impacted third-quarter earnings per share by $0.45. Delta stated that, excluding the outage's effects, annual adjusted income should fall around the midpoint of its previously announced guidance of $6 to $7 per share.

For the September quarter, Delta reported adjusted per-share earnings of $1.50, down from $2.03 in the same period last year. Analysts had predicted earnings of $1.52 per share. Quarterly adjusted revenue totaled $14.59 billion, slightly below analyst expectations of $14.65 billion.