Delta Air Lines aircraft are parked at Atlanta in June 2024. (Photo by Andrew Harnik)
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Delta Air Lines says it has booking momentum and nothing is slowing it down, not even the government shutdown.
“Over the last six weeks, sales trends have accelerated across all geographies and in every advance purchase window, positioning Delta to finish the year with momentum, with healthy sequential unit revenue improvement driven by continued domestic strength and meaningful improvement in transatlantic unit revenue,” said President Glen Hauenstein, in a prepared statement, as the carrier reported third quarter results.
Regarding the shutdown, now in its ninth day, President Ed Bastian said on CNBC “Squawk Box” that “We’re not seeing any real impact at all,
“There is so much momentum in the marketplace,” Bastian noted, that its hard to see an impact. Reminded that some airports are seeing diminished air traffic control staffing, he said “You see delays all the time,” and it is difficult to separate out shutdown impact from the normal course of delays.
However, “I would say that if this doesn’t get resolved, say beyond another 10 days or so, you probably will start to see some impacts,” Bastian said.
The carrier reported operating revenue of $15.2 billion, up 4%. Excluding items, net income was $1.12 billion, up 15%, or $1.71 per share. Analysts surveyed by LSEG had estimated $1.53.
Most notably, Delta said domestic revenue rose 5% to about $9 billion. Transatlantic revenue was down 2% to $3 billion, while Latin America was down 3% to $759 million and Pacific was up 3% to $667 million.
Looking ahead, Delta forecast current quarter revenue growth of 2% to 4%.
The strong forecast drove the share price up. Shortly before the opening, shares were trading at $61.53, up nearly 8% in pre-market trading.
“We view this as a very positive report across-the-board with Delta delivering 3Q results and a forward outlook that met what investors were looking for,” Cowen analyst Tom Fitzgerald wrote Thursday morning. He said shares in United would also benefit.
“We expect the shares to react positively to the breadth of the strong revenue outlook and management’s confidence in momentum continuing into 2026,” Fitzgerald said. . “The most positive read-through in our view is for United (UAL, Buy, $98.09) given their exposure to premium, international, and corporate.”
For the current quarter, Delta forecast current quarter revenue growth of 2% to 4%, with an operating margin between 10.5% and 12%, revenue gain of 2% to 4% and earnings per share between $1.60 and $1.90. Analysts had forecast $1.66.
Delta noted an improving domestic revenue environment, easing industry concerns that domestic revenue had not been growing until late in the third quarter. Delta said “domestic passenger revenue grew 5% year-over-year, supported by an acceleration in corporate sales, continued strength in premium cabins and an inflection in main cabin unit revenue growth.” Corporate sales rose 8%.
Fitzgerald wrote “The most encouraging geographic update is domestic RASM inflected positive with main cabin demand steadily improving as low-end supply retrenches. Delta anticipates continued domestic strength in 4Q and a ‘meaningful improvement in transatlantic’ RASM.”