Shares of Delta Air Lines Inc (NYSE: DAL) are up nearly 3.0% in premarket trading after the airline said it now expects to turn a profit in the fourth quarter, thanks to strong holiday demand.
Highlights from CEO Bastian’s interview on CNBC’s ‘Squawk Box’
According to Delta Air Lines, Omicron was hitting international bookings, but strength in domestic numbers was substituting to keep the overall financials strong. On CNBC’s “Squawk Box”, CEO Ed Bastian said:
The holiday bookings, particularly for Christmas and the New Year, are coming in very strong. We had a good thanksgiving too. So, a combination of stronger revenue coupled with a bit of moderation in fuel prices is going to result in a profit for us this quarter.
Delta was also profitable in the fiscal third quarter but had cited higher fuel costs to forecast a pre-tax loss for Q4. If it now delivers on its updated guidance for a $200 million profit, Delta will be one of the world’s only two major airlines to stay profitable in the second half of 2021.
Unit revenues to beat 2019 levels
CEO Bastian is hopeful that unit revenues will beat 2019 levels over the next two weeks. Delta had forecast up to $2.40 in fuel costs per gallon at the end of its Q3 versus $2.30 at the top end it expects now.
According to the chief executive, it could take up to two years to get Delta back up to its full capacity, until which some costs will remain above 2019 levels.
We’re seeing pressure on certain costs like supply chain costs, volatility, and fuel labour cost. Over the next couple of years, once we’re completely back to our full capacity, we expect those costs are going to pretty close to where we were in 2019.
For 2022, the Georgia-based air carrier is likely to stand at about 90% of its pre-pandemic capacity.
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