Recap: Delta Air Lines reports 3rd-quarter earnings
Delta Air Lines reported third-quarter earnings that beat consensus expectations.
Delta says its premium cabins are outperforming economy class by five percentage points.
The results come in the wake of controversial changes Delta made to its SkyMiles program.
Delta Air Lines reported better-than-expected third-quarter earnings Thursday. CEO Ed Bastian, President Glen Hauenstein, and CFO Dan Janki addressed investors and journalists on a call in the wake of the report.
They flagged strong growth in the airline's premium cabins, but also pointed to some potential clouds on the horizon for Delta, including rising fuel costs and continued supply-chain issues with jet parts.
The company's stock was up 9.5% year-to-date through Wednesday's close, compared to 13% for the benchmark S&P 500. All but one of the 22 analysts who cover the stock had a "buy" rating on it leading up to the results, according to Bloomberg.
Still, as the executives spoke on the call, Delta's stock declined after it put out a new forecast for full-year earnings that was toward the low end of its previous forecast.
Delta confirms that it will revamp its revamp to its SkyMiles program.
Delta confirms that it's listening to customers who were incensed by changes it made to its SkyMiles loyalty program.
CEO Ed Bastian says, in fact, he agrees with some of the feedback on the SkyMiles changes.
He doesn't announce what those changes-to-the-changes might be, but says that people should stay tuned — that the airline has heard feedback and is adjusting the revamp.
Bastian said some changes to the SkyMiles program still will end up happening. But he says there will be "modifications" to the changes that were part of the original announcement.
The revamped SkyMiles program would focus more on how much customers spend as opposed to how much they fly, something American Airlines also has done with its AAdvantage program. It's apparently going to adjust some of those changes, but the airline isn't ready to announce specifics just yet.
Delta isn't paying attention to Ozempic.
Delta Air Lines was asked by a Wall Street Journal reporter whether it considers Ozempic and other weight-loss drugs when planning for the future.
Some reports have said that if more people take the weight-loss drugs, that could mean the average passenger weighs less. Because a lighter plane is a cheaper plane to fly, that could boost airlines' profits.
But that's not in Delta's thinking just yet, its executives said on Thursday's call.
Does Delta take Ozempic into consideration? "No we don't," Bastian said.
Business travel is starting to come back, Delta says — especially in the tech and financial services sectors.
Delta says corporate travel is growing strongly in the tech sector and the financial services sector — something Bastian says is happening as the companies work their way to the "new normal" in the wake of Covid.
He says Delta is in a better position to pick up that increased demand from business travelers because of its differentiated product: that is, corporate travelers are more likely to buy premium seats on Delta as opposed to the budget one-class carriers like Southwest and Allegiant.
Still, Bastian says the entertainment industry strikes in Los Angeles — where Delta maintains a strong presence — and auto industry strikes in Detroit, where it also maintains a strong presence, are having an effect on the airline. Delta says business is still strong in those two hubs, but the strikes have definitely affected travel.
Delta's premium products, like its Delta One service, are leading the way, its president says.
High spenders are helping Delta's bottom line, with revenue from its premium products like Delta One up 17% over the same quarter last year, the airline's president says.
That's 5 percentage points higher than the main cabin, Delta President Glen Hauenstein says.
That means high spenders are even more important for the airline, especially as businesses push a return to the office. As more workers return to the office, they're also likely to return to the skies for business trips. And a lot of those business trips are taken in the premium cabin.
And workers who still have the opportunity to work from anywhere will likely continue to add a tailwind to Delta's numbers with "bleisure travel" — mixing business and leisure — creating demand that wasn't there before Covid.
Delta's CEO acknowledges "unfolding war in Israel" at the start of the company's earnings call.
Delta Air Lines CEO Ed Bastian acknowledges the "unfolding war in Israel" at the start of the call and says the airline is donating $1 million to the American Red Cross. He says inbound and outbound flights to Tel Aviv have been suspended through the end of the month. He calls the events "tragic and horrific."
Delta stock climbs slightly after 3Q earnings.
Delta shares rose 0.1% in early trading on Thursday after its third-quarter earnings report. The stock is now up 9.7% year-to-date.
Delta beats estimates, cuts profit outlook.
3rd quarter
Adjusted EPS $2.03 vs. $1.51 y/y, estimate $1.94
EPS $1.72 vs. $1.08 y/y
Adjusted revenue $14.55 billion, +13% y/y, estimate $14.55 billion
Passenger revenue $13.12 billion, +14% y/y, estimate $13.08 billion
Cargo revenue $154 million, -36% y/y, estimate $199.1 million
Passenger load factor 88% vs. 87% y/y, estimate 86.9%
Available seat miles 73.23 billion, +16% y/y, estimate 73.14 billion
Revenue passenger miles 64.10 billion, +17% y/y, estimate 63.53 billion
Adjusted net income $1.31 billion, +35% y/y, estimate $1.25 billion
Yield per passenger mile 20.47c, -2.2% y/y
Full-year 2023 forecast
Sees adjusted EPS $6 to $6.25, saw $6 to $7, estimate $6.03
Source: Bloomberg
Delta's consensus third-quarter adjusted EPS forecast is $1.94.
3rd quarter
Adjusted EPS estimate $1.94 (Bloomberg Consensus)
EPS estimate $1.94
Adjusted revenue estimate $14.55 billion
Passenger revenue estimate $13.08 billion
Cargo revenue estimate $199.1 million
Passenger load factor estimate 86.9%
Available seat miles estimate 73.1 billion
Revenue passenger miles estimate 63.5 billion
Adjusted net income estimate $1.25 billion
Full-year 2023
Adjusted EPS estimate $6.03
EPS estimate $6.03
Adjusted revenue estimate $54.59 billion
Source: Bloomberg
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