Delta Air Lines Inc on Thursday reported higher quarterly earnings on the back of strong holiday travel demand and predicted a swift recovery from turbulence caused by the Omicron coronavirus variant, driving its shares higher.
Delta Air Lines Inc says surging COVID-19 cases will likely result in losses in January and February, resulting in a loss for the quarter through March.
However, it expects the recovery in travel demand to resume around late February, putting the carrier in a position to generate profit in the June, September and December quarters.
Overall, it expects a “meaningful” profit in 2022 and backed its target to exceed the company’s pre-pandemic financial performance by 2024.
“If we could pick a period of time for an Omicron variant to surge, we would probably pick this time of year,” Delta’s President Glen Hauenstein told investors on a call.
Air travel demand tends to be the weakest in the first quarter.
The company said bookings for international travel were down, but Delta believes the transatlantic market will have a strong spring and summer once Omicron-driven border restrictions are lifted.
Chief Executive Ed Bastian expects business travel to pick up by the middle of February.
The Atlanta-based carrier’s adjusted profit for the quarter through December came in at 22 cents a share, beating analysts’ average estimate of 14 cents per share, according to IBES data from Refinitiv, marking the second profitable quarter in a row.
The company estimates revenue in the March quarter will recover to 72% to 76% of 2019 levels. It expects to restore 83% to 85% of pre-pandemic capacity in the current quarter.
Its capital expenditure in the quarter is projected to increase by about 69% from the December quarter to $1.6 billion.
Peter McNally, global sector lead for industrials, materials and energy at research firm Third Bridge, said the airline is “managing well” despite the challenges facing the industry.
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