Delta Air Lines (DAL) Earnings 4Q 21

A Delta Airlines plane lands from Los Angeles at Kingsford Smith International Airport in Sydney, Australia, on October 31, 2021.

James D. Morgan | Getty Images

Delta Air Lines said on Thursday that the wave of the ommicron variant of Covid-19 will drive the company to a loss in the first quarter, but it still expects profits this year on stronger travel demand.

In the fourth quarter, Delta posted its highest revenue since the end of 2019, driven in part by strong vacation bookings and increased business travel.

Revenue of $9.47 billion exceeded analyst expectations by $9.21 billion. The company has yet to fully recover from the Covid-19 crisis. Revenue fell 17% from $11.44 billion in the last three months of 2019, just before the coronavirus pandemic began.

Delta’s shares rose more than 4% shortly after 10 a.m. ET after the company reported the results.

CEO Ed Bastian said Omicron is expected to delay the recovery in travel demand by 60 days.

President Glen Hauenstein warned: “The recent surge in the number of COVID cases related to the omicron variant is expected to impact the pace of demand recovery early in the quarter, with recovery momentum from President’s Day weekend will resume.”

It set aside $108 million for employee profit-sharing, the first in nearly two years.

“Amid ongoing challenges, including one of the toughest vacation environments we’ve ever encountered, you continue to rise above yourself and provide unparalleled service to our customers,” Bastian said in a note to employees.

Here’s how Delta performed compared to what analysts expected, according to average estimates compiled by Refinitiv:

  • Adjusted earnings per share: 22 cents versus 14 cents expected.
  • Revenue: $9.47 billion versus $9.21 billion expected.

Delta posted a net loss of $408 million in the fourth quarter as fuel and other costs increased, partly due to disruptions from the proliferation of omicron. Adjusted for one-off items, Delta reported earnings per share of 22 cents, ahead of Wall Street’s 14 cents expectations.

For the full year, Delta reported $280 million in profits, its first in two years, thanks to $4.5 billion in federal aid for airline labor costs during the crisis. In 2020, after demand for travel fell, Delta posted its biggest loss ever at $12.4 billion.

Delta is the first US carrier to report its fourth quarter results and provide a detailed forecast of the impact of the variant on its business. The rapid spread of Omicron has affected industries from theaters to restaurants to retailers and supermarkets.

Airlines, including Delta, have canceled thousands of flights since Christmas Eve as a spike in Covid infections among crews left them with a staff shortage.

Delta said the operation has stabilized and ommicron has canceled just 1% of its flights in the past week.

But omicron will keep bookings in check for the short term, the airline said.

“Despite expectations of a loss in the March quarter, we remain positioned to generate healthy profits in the June, September and December quarters, resulting in meaningful gains in 2022,” said Delta CFO Dan Janki in the results publication.

Investors have largely dismissed the impact of omicron on airlines. Delta’s shares are up 3.9% through Wednesday this year, while United and American shares are up 6.3% and 3%, respectively. The S&P 500 is down 0.84% ​​in comparison.

Delta expects first quarter revenue to be 24% to 28% below 2019 levels with capacity 15% to 17% below what it flew three years earlier. It forecasts a cost increase of about 15% from 2019, excluding fuel.

Airlines compared the results to 2019 to show how far the company has recovered from pre-pandemic levels.

One of the challenges Delta and other airlines face this year is recruiting staff to meet travel demand, a challenge in a tight job market.

Delta executives will detail the results and their 2022 outlook on a 10 a.m. ET call.

United Airlines is expected to report results after the market closes on Wednesday, followed by American Airlines the following morning.


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