Delta Air Lines earnings top forecasts, but higher fuel costs will hit travel boom profits

Delta Air Lines said it sees the ongoing travel boom extending into the end of the year, but cautioned that higher fuel costs will dent profit margins.

Oct 12, 2023 - 19:30

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Delta Air Lines earnings top forecasts, but higher fuel costs will hit travel boom profits

Updated at 9:36 am EDT

Delta Air Lines (DAL) - Get Free Report shares moved lower in early Thursday trading after the carrier posted stronger-than-expected third quarter earnings and said the current travel demand surge continuing into the holiday season.

Delta said adjusted earnings for the three months ending in September were pegged at $2.03 per share, up 34.4% over the same period last year and firmly ahead of the Street consensus of $1.94 per share. Group revenues, Delta said, rose by around 21% to a $15.49 billion, a figure that also topped analysts' estimates of a $14.54 billion tally.

Looking into the final months of the year, Delta said its sees revenue growth of between 9% and 12% with earnings in the range of $1.05 to $1.30 per share.

However, surging fuel costs are likely to pressure profit margins for the full year, and Delta clipped its 2023 forecast to between $6 to $6.25 per share, down from its prior forecast of between $6 and $7 per share.

"Thanks to the outstanding work of our entire team, Delta delivered record September quarter revenue and a double-digit operating margin,: said CEO Ed Bastian. "Our operational reliability continues to strengthen, thanks to our people, and I'm pleased to recognize their outstanding efforts with over $1 billion accrued year-to-date towards profit sharing."

"Delta continues to set itself apart as a trusted consumer brand delivering welcoming, caring and elevated service by the best people in the industry," he added. "Our differentiated position supports our expectations for full year revenue growth of 20 percent over 2022, and pre-tax earnings of over $5 billion, a near doubling over prior year earnings."

Delta Air Lines shares were marked 0.5% lower in early Thursday trading immediately following the earnings release to change hands at $35.75 each, clipping the stock's six-month gain to around 6%.