(Bloomberg) -- Delta Air Lines Inc. forecast profit and sales short of Wall Street’s estimates for the final months of the year, suggesting a slow recovery from a challenging summer travel season.
Adjusted earnings will be $1.60 to $1.85 a share in the fourth quarter, the carrier said in a statement Thursday that also included third-quarter results. The midpoint is below the $1.78 average of analyst estimates compiled by Bloomberg. Delta’s revenue growth guidance of 2% to 4% compares with an average 4.4% year-over-year increase expected by analysts.
The outlook underscores the hurdles Delta and others face coming out of a summer in which an oversupply of US flight capacity left many carriers scrambling to cut ticket prices and pull back flying plans. Unit revenue, a gauge of demand and fares, only turned positive across the industry in some regions in September. Delta was also hurt by a technology-related system breakdown that led to thousands of canceled flights over several days in July.
The carrier’s shares fell 2.1% at 9:34 a.m. in New York. Rivals United Airlines Holdings Inc. and American Airlines Group Inc. also declined.
Travel demand for the year-end holidays is looking “very strong,” Delta Chief Executive Officer Ed Bastian said in an interview. Still, the airline anticipates a slowdown around the upcoming US presidential election, which led to a 1 percentage point reduction in its unit revenue guidance this quarter.
“Every four years when we’ve gone through a national election, we have seen a bit of a pause on the consumer side due to the level of uncertainty,” he said. “I think it’s going to be true across any major consumer discretionary purchases, especially larger purchases.”
Delta also subtly shifted its profit outlook for the full year, saying it will be “around the midpoint” of its long-held range of $6 to $7 a share, excluding the 45-cent impact from the technology outage. The airline had said Sept. 12 that it expected per-share earnings “at or above the midpoint” of that range.
Adjusted profit in the third quarter came to $1.50 a share, narrowly missing the $1.52 average expected by analysts. Adjusted revenue was $14.6 billion, while analysts expected $14.65 billion.
The period included about $500 million in reduced revenue and higher costs from the CrowdStrike Holdings Inc. technology outage — in line with Delta’s prior guidance.
The airline has said it would pursue legal remedies to recover damages against CrowdStrike and Microsoft Corp. after the outage affected more than 1.3 million of its customers. Bastian declined to comment on the status of talks, saying that it was “in the hands of the lawyers.”
The third-quarter results and soft outlook are largely “colored by noise,” including the election and bad weather, Ravi Shanker, an analyst with Morgan Stanley, said in a note. Management’s enthusiasm around bookings for the holidays and early 2025 “is a reassuring sign that demand remains strong.”
Bastian said it’s “impossible to speculate” on the impact to Delta or other carriers from Hurricane Milton. Airlines added flights over the last few days to help move people out of Florida, and at least seven airports were shuttered as the storm approached Wednesday.
“It’s hitting some pretty important markets in Orlando and Tampa and Sarasota,” he said. “We’ll just have to see and make an assessment of the damages.”
(Updates share trading in fourth paragraph.)
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