The Atlanta-based airline said Thursday Planes are full but profits are under pressure This is because costs are rising and increased capacity is weighing heavily on fares.
The company expects its third-quarter capacity to increase by 5 to 6 percent compared to last year, slower than the 8 percent increase in the second quarter.
The company’s performance is as follows: Three months ending June 30That compares with Wall Street expectations, based on LSEG’s consensus forecast.
- Adjusted earnings per share: $2.36 vs. expected price of $2.36
- Adjusted earnings: $15.41 billion vs. expected $15.45 billion
For the three months ended June 30, Delta posted adjusted revenue of $15.4 billion, up 5.4% from a year ago and below Wall Street expectations. Net income fell nearly 30% from a year ago to $1.31 billion, or $2.01 per share, while operating expenses rose 10% from a year ago. Adjusting for one-time items, Delta reported profits of $1.53 billion, or $2.36 per share, in line with analysts’ expectations.
“Our second quarter was a really strong performance,” CEO Ed Bastian said in an interview. “We’re seeing the fare reductions that we took this quarter have an impact on the domestic market.”
Bastian said that as U.S. airline capacity decreases toward the end of the summer, Delta will be better able to match demand. Delta said corporate travel continues to grow and that it expects most customers to maintain or increase their corporate travel spending beyond this quarter.
International revenues have been strong since the pandemic subsided, but airlines are expanding their schedules, intensifying competition for customers. Delta Air Lines said it expects its transatlantic unit revenues to fall by 1 percentage point due to the Paris Summer Olympics. Bastian told CNBC that the impact will be about $100 million from June through August. The airline’s partnership with Air France gives it more capacity to the French capital than its rivals.
Delta Air Lines is on track to set another record for profit this quarter. The airline expects sales to grow as much as 4% and adjusted earnings per share to be between $1.70 and $2, below the $2.05 per share expected by analysts surveyed by LSEG.
Despite the slightly lower than expected outlook, Delta Outstanding in the aviation industryIt is the most profitable U.S. airline, while many of its competitors struggle to turn a profit. United AirlinesUnited Airlines, which reports earnings next Wednesday, is trying to catch up with Delta Air Lines as the two companies race to add more premium seats. Analysts give both Delta and United more “buy” ratings than any other U.S. airline.
Delta Air Lines reported that sales of premium tickets such as first class rose 10% to $5.6 billion in the second quarter, while sales of economy class tickets increased 0.3% to about $6.7 billion. American Express Credit card transactions brought in $1.9 billion, up about 9% from last year.
Bastian said Delta is “fairly insulated” from industry overcapacity because it derives much of its revenue from premium seats and other sources rather than standard economy-class tickets.
Delta Air Lines reiterated its full-year profit guidance of $6 to $7 per share and said it still expects to generate as much as $4 billion in free cash flow.
