Delta Airlines sees strong demand for international travel through the fourth quarter of 2023. However, rising fuel costs could impact the company’s profits.
In its latest update, Delta Airlines (NYSE: DAL) reported that their profits increased by 60% during the third quarter (Q3 2023) as travel demand remained strong during the summer. This was especially true for international trips, the airline operator said.
However, Delta Air Lines said full-year earnings would be lower than previously estimated amid rising fuel prices. For the quarter ended Sept. 30, Delta Air Lines reported adjusted earnings per share of $2.03, better than the expected $1.95. Also, adjusted revenue for the third quarter was in line with expectations at $14.6 billion.
This represents growth of 13% year-over-year and is in line with analysts’ predictions. Net income for the quarter came in at $1.11 billion, or $1.72 per share, representing a substantial increase of 59% from the $695 million, or $1.08 per share, reported during the same quarter last year. When adjusted for third-party refinery sales and other items, the company’s earnings per share for the quarter reached $2.03.
In its quarterly report released Thursday, Delta revised down its full-year earnings estimates, expecting adjusted earnings of $6 to $6.25 per share. The adjustment came after an initial forecast of $6 to $7 per share in July. Additionally, Delta cut its annual free cash flow forecast to $2 billion from $3 billion expected over the summer.
Despite these adjustments, Delta remains optimistic about strong travel demand in the final quarter of the year. The airline expects revenue to grow 9% to 12% compared to the same quarter in 2022. Earnings per share for the period are expected to be $1.05 to $1.30, in line with market estimates. CNBC speaking to Delta Airlines CEO Ed Bastian Said,
“We expect the same trend to continue in the fourth quarter. Obviously, there is some short-term pressure on fuel as fuel rose sharply in the third quarter and remained at relatively high levels in the fourth quarter.
Delta Airlines says demand for overseas flights will be high in third quarter of 2023
Along with other global airlines, Delta saw substantial growth in demand for international travel, particularly trans-Atlantic flights. This led to a significant 34% increase in revenue for these routes during the third quarter compared to the previous year.
Despite growth in both domestic and international capacity, Delta’s aircraft maintained high occupancy rates in the quarter with an 88% load factor. This figure is 1 percentage point higher than the same period last year. Still, unit revenue from passengers saw a 1.5% year-on-year decline, partly due to lower airfares as airlines expanded their flight schedules.
Additionally, Delta reported significant growth in demand for premium seats such as business class or premium economy. Main cabin revenues reached $6.62 billion, representing an increase of 12% over the previous year, while sales of premium products increased 17% to $5.11 billion.
Delta’s CEO, Ed Bastian, emphasized the strong performance of their premium offerings, particularly within domestic travel. He also said business travel has recovered impressively, with a recovery of more than 80% over 2019 levels.
Delta faced some backlash from customers last month when it unveiled changes that would make it more challenging to obtain elite frequent flyer status and access its popular airport lounges due to long entry lines. Will reduce. Bastian later acknowledged that these policies could go “too far” and indicated that modifications would be made in response to customer feedback.
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