Delta Air warns of loss in current quarter after stronger than expected Q4 profit
Written by on January 13, 2022
January 13, 2022
By Rajesh Kumar Singh
CHICAGO (Reuters) – Delta Air Lines Inc on Thursday reported higher quarterly earnings on the back of strong holiday travel demand, but warned of a loss in the current quarter through March due to turbulence caused by the Omicron coronavirus variant.
The Atlanta-based carrier’s adjusted profit for the fourth quarter 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.
Delta said the Omicron variant will likely delay the recovery in travel demand by 60 days, but it expects the recovery to resume around the Presidents Day holiday in February.
“Despite expectations for a loss in the March quarter, we remain positioned to generate a healthy profit in the June, September and December quarters, resulting in a meaningful profit in 2022,” Dan Janki, Delta’s chief financial officer, said in a statement.
Chief Executive Ed Bastian said the company was “confident in a strong spring and summer travel season with significant pent-up demand for consumer and business travel.”
A surge in COVID-19 cases, driven by the Omicron variant, has caused havoc for the airline industry. An increase in daily employee sick calls as well as a series of winter storms have led to mass cancellations of flights.
For example, in one day alone nearly one-third of United Airlines’ workforce at Newark Liberty International Airport called in sick.
Since Christmas Eve, U.S. airlines have canceled more than 31,300 flights, or about 7% of the scheduled total, according to flight-tracking service FlightAware.
Delta had to cancel more than 2,000 flights. The airline, however, said its operation has stabilized over the past week, with cancellations declining to less than 20 flights a day.
Operational disruptions are projected to add to its cost pressures in the current quarter.
The company estimates revenue in the quarter through March would recover to 72% to 76% of 2019 levels. It expects to restore 83% to 85% of the pre-pandemic capacity in the current quarter.
(Reporting by Rajesh Kumar Singh; Editing by Chris Reese)