Delta Air Lines is scheduled to report its third-quarter financial results before the market opens on Friday. Here is what to know.
REVENUE: The carrier is expected to report $17.65 billion in sales, compared with $15.20 billion in the prior-year quarter, according to FactSet.
NET PROFIT: The Atlanta-based company is expected to post a profit of $1.20 billion, compared with a profit of $1.42 billion the year before, according to FactSet.
ADJUSTED EARNINGS PER SHARE: Adjusted earnings are expected to come in at $1.77 a share, compared with $1.71 a share the prior year.
The stock has gained 19% this year, and recently traded at $81.84.
WHAT TO WATCH
- Delta kicks off earnings season for airlines as the industry sees persistently elevated fuel prices that prompted price hikes throughout the year. The carriers are pressured to raise prices again just as capacity growth picks up, says Melius Research analyst Conor Cunningham. Consumer sentiment is weak and many travelers are pushing back on price in other categories such as restaurants, Cunningham says. Still, "there's no choice," Cunningham says, as American, JetBlue and smaller leisure carriers are on track to lose money despite raising base fares.
- Delta stands out as more insulated from high fuel costs, Cunningham says. Its oil processing refinery could give it a sizable benefit in the fourth quarter, he says. Delta has diversified across refineries, maintenance and repair, which should help it weather the industry challenges related to fuel, he says. Its strong loyalty program could also help it deal with worse consumer sentiment around inflation.
- Delta, along with United Airlines, is one of the best positioned to deal with the fuel problems, says TD Cowen analyst Tom Fitzgerald. The company has strong revenue diversity, balance sheet strength and a grip on the industry profit pool, Fitzgerald says. If fuel prices normalize, Fitzgerald expects Delta and United to widen their lead compared with peers.
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