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Delta Air Lines (DAL) earnings in the second quarter of 2022

An Airbus A330-323 aircraft operated by Delta Air Lines.

Benoit Tessier | Reuters

Delta Air Lines reported quarterly earnings on the third day thanks to passengers willing to pay for the flight, rather than paying higher costs.

The carrier also vowed to improve reliability after the increase in delays and cancellations prompted it to reduce summer hours.

The airline industry has been “hungry for revenue for the last two years,” CEO Ed Bastian told CNBC’s “Squawk Box” after the carrier released the results on Wednesday. “We did it too hard. We went back a little bit … and we’re doing a great operation in July.”

Delta shares fell more than 7% in morning trading after their adjusted results fell short of analyst estimates. Rival shares also fell more than in the broader market, after inflation data were higher than expected.

Delta said its capacity for the third quarter would be 83% to 85% of 2019 levels, suggesting the airline maintains a conservative calendar compared to some rivals. The company expects third-quarter earnings and has repeated its year-over-year profitability forecast.

Sales in the third quarter are expected to be 1% to 5% higher than three years ago, along with rising costs.

Delta is the first U.S. airline to report second-quarter earnings. United Airlines and American Airlines will announce it next week.

Here’s how the company performed in the second quarter compared to what analysts expected, according to Refinitive’s average estimates:

  • Adjusted earnings per share: $ 1.44 versus $ 1.73 was expected.
  • Income: $ 13.85 billion was expected compared to $ 13.57 billion.

Although there were problems at the start of the summer travel season, demand rose for both business and leisure travel, Delta said. Domestic corporate travel sales recovered 80 percent before the Covid pandemic, up 25 percentage points from the first quarter of the year, he said.

The cost of the delta went up by one kilometer per seat, excluding fuel, which rose by 22% in the three months ending June 30, 2019. Its fuel spending rose 41% to $ 3.2 billion from three years ago.

An increase in travel demand earned the airline $ 735 million. Given how much tariffs have risen, Delta flew 18% less capacity in the second quarter than in the same period in 2019, but generated revenue of $ 13.820 billion, 10% more than three years ago.

Revenues for domestic travel were up 3%, Delta said, noting that there were also improvements in cross-Atlantic travel.

Delta and other airlines have compared the 2019 results to show progress in returning to pre-pandemic performance.

‘Six hard weeks’

Delta and its member airlines will face questions from investors about the peak of the travel season and the higher cost. Staff shortages have exacerbated common problems, such as bad weather, and increased flight cancellations and delay rates.

Bastian said Delta is limiting its capacity and has already improved its performance.

“We had a tough six weeks,” Bastian said, apologizing to customers for the interruptions. “We have provided the right level of compensation and forgiveness.”

On the fourth holiday weekend in July, when Delta allowed passengers to change flights without paying a fare difference, the airline said the unusual exception would allow customers to avoid potential flight disruptions.

Airline executives and the Federal Aviation Administration have blamed each other’s staffing problems for helping with the delays. Transportation Secretary Pete Buttigieg has publicly warned airlines about not being ready for summer travel.

Bastian said Delta has added 18,000 employees since the start of 2021 to bring it to 95% of the 2019 workforce. Delta called for a similar number of employees and persuaded them to take purchases or early retirement packages early in the pandemic in an effort to reduce costs.

The carrier is in the process of training many of its new employees.

Delta executives will discuss the results with analysts and the media on Wednesday at 10 p.m.

Delta Air Lines (DAL) earnings in the second quarter of 2022

Source link Delta Air Lines (DAL) earnings in the second quarter of 2022

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