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Delta Air Lines sees a fast recovery from Omicron turbulence

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 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.

Source: AAP