Delta Air Lines reports a profit in the third quarter and issues a warning about rising jet fuel costs.
On Wednesday, Delta Air Lines announced a profitable third quarter, owing to a steady recovery in air travel, but warned that rising fuel prices could hurt profits in the fourth quarter.
“While demand is improving, the recent increase in fuel prices will put a strain on our ability to stay profitable in the December quarter,” stated CEO Ed Bastian.
Domestic travel remained a strong point in the wake of the Covid-19 vaccine release in the United States, according to the major US carrier, which had a dismal 2020 following a steep downturn in travel during the severity of the pandemic.
Delta noted in its earnings release that travel to Latin America was strong, while transatlantic travel “improved the most” during the quarter, owing to border reopenings.
Corporate volumes remained “steady,” but the recovery in business travel stalled in September as companies postponed reopening their offices owing to the virus’s Delta form.
Delta made $1.2 billion in profits for the quarter ended September 30, compared to a loss of $283 million the year before.
Revenues were $9.1 billion, up from $3.1 billion the year before but still short of the $12.6 billion reported in 2019.
Delta expects fourth-quarter capacity to rebound to 80 percent of pre-pandemic levels due to factors such as “strong Christmas demand,” according to the airline.
The airline predicted that jet fuel will cost between $2.25 to $2.40 a gallon in the fourth quarter, up about 20% from the previous quarter’s pricing.
In mid-morning trade, shares sank 4.5 percent to $41.57.