Delta Air Lines Lowers Guidance, Stock Down 2%

Delta Air Lines (NYSE:DAL) has issued its fourth-quarter earnings guidance, falling short of analysts’ expectations as the airline continues to recover from the aftermath of a significant summer network outage and faces pressure from overcapacity on pricing. Delta now anticipates adjusted earnings per share of $1.60 to $1.85, slightly below Wall Street’s median estimate of $1.78. As a result, shares fell around 2% intra-day today.

The company expects total revenue for the quarter to grow between 2% and 4%, although President Glen Hauenstein noted that the overall increase in industry supply is gradually stabilizing. Despite robust holiday booking trends, Delta foresees a slight dip in demand, attributed to potential travel disruptions surrounding the upcoming U.S. election.

In July, Delta experienced widespread operational challenges following a critical network issue linked to a cybersecurity software update from CrowdStrike, resulting in nearly 7,000 flight cancellations over five days. The company reported a direct financial impact of approximately $380 million from the incident, primarily due to cash and frequent flyer refunds. Operating expenses unrelated to fuel were impacted by $170 million, while lower fuel consumption due to the cancellations saved an estimated $50 million.

The third quarter reflected the impact of the outage, with Delta’s adjusted earnings per share dropping by $0.45 due to the disruptions. Without this setback, Delta expects its annual adjusted income to align with the midpoint of its $6 to $7 per-share guidance. For the September quarter, the airline reported adjusted earnings of $1.50 per share, down from $2.03 a year earlier and slightly below Street expectations of $1.52. Quarterly revenue reached $14.59 billion, just shy of the anticipated $14.65 billion.