Delta Air Lines expects a slight impact on its fourth quarter revenues from the US elections being held in November, it said in its third quarter earnings report on October 10, 2024.
“We anticipate a one point impact to total unit revenue from reduced travel demand around the election,” said Delta president Glen Hauenstein.
The elections are scheduled to be held on November 5, 2024.
In its third quarter earnings call, Hauenstein explained: "It's really obvious to see the trend line where you have markets that are performing incredibly well with positive momentum October and then again as soon as the election is complete and on into December - really all the way into January. You see those two weeks just being way off trend. It's not just domestic, it's pretty much across the board that those two weeks are underperforming compared to before and after those weeks.
Total revenue is expected to be up 2-4% in the fourth quarter, in comparison to the same period last year, bolstered by a 3% capacity growth. It also anticipates fourth quarter earnings per share to be up 11-13% over last year. Furthermore, its cost per available seat mile (CASM) excluding fuel is set to be up 3.2 pts. Fuel is guided to be between $2.20-$2.40 per gallon.
"For the December quarter, we expect the improved trends to continue and bookings for the holiday period are strong," added Hauenstein. Delta’s report noted that international demand remains strong, which was led by Transatlantic flights followed by Latin America flights. It added that its network restoration is continuing in the Pacific, with double-digit revenue growth driven by travel to South Korea and Japan.
The US airline reported somewhat flat revenue growth in the third quarter with a 1% increase to $15.7bn. However, it noted that the CrowdStrike IT outage during the summer had impacted revenues by 2.6 percentage points (pts). In addition, the technical issues led to capacity down 1.5 pts and its operating margin to be down 2.3 pts.
Delta reiterated its previous disclosure that the CrowdStrike outage had directly impacted revenues by $380 million, primarily driven by refunding customers for over 7,000 cancelled flights during the five-day period and providing customers compensation.
The company’s operating margin was down 3.9 pts overall to 8.9% in the third quarter.
Delta’s net income was down 26% to $971 million and its diluted EPS was down 25 cents to $1.97. Operating expenses were up 6% to $14.3bn and fuel expenses were down 6% to $2.7bn. The decline in fuel expenses was driven by the result of the aforementioned cancellations.
"Premium products are really doing much better currently than coach," management said in its call. "As we move through the next couple of schedule changes, we expect that momentum to pick up as the carriers that have primarily coach products begin rationalising capacity."
Passenger revenue for the quarter totalled $13.1bn, down 12% from last year. Main cabin ticket revenue was down 5% to $6.3bn, while premium product tickets were up 4% to $5.3bn.
The company said in its report that corporate sales had continued to grow, up 7% over last year. It reported “double-digit growth in the tech, media and banking sectors”. It added that corporate survey results showed promising growth for corporate sales next year.
The company’s total revenue per available seat mile (TRASM) totalled $0.2058 – down 3% from last year’s third quarter. CASM was up 2% to $0.1875.
"We continue to expect our fleet growth to be less than 2% this year, with 20 net aircraft additions as half of our new deliveries are replacements," said Delta chief financial officer Dan Janki in the company's earnings call.
During the quarter, Delta generated an operating cash flow of $1.3bn, up 18% over last year, and a free cash flow of $95 million, compared to a negative $250 million in last year’s third quarter.
As of the September quarter’s end, it had an adjusted net debt $18.7bn, reducing $2.9bn from the end of 2023. During the quarter, it made $263 million payments on its debt and finance lease obligations.