Delta Air Lines (DAL) Profits in the Fourth Quarter of the Year 21

Delta Airlines said Thursday that the rise of the Omicron variant of Covid-19 will lead it to a first-quarter loss, but it still expects a rebound in travel demand and a profit this year.

In the fourth quarter, Delta posted its highest revenue since late 2019, thanks in part to strong vacation bookings and more business trips. Sales of $9.47 billion exceeded analyst expectations of $9.21 billion. The company is still not yet fully recovered from the Covid-19 crisis. Revenue is down 17% from $11.44 billion during the last three months of 2019, just before the start of the coronavirus pandemic.

Delta shares rose 2.7% in pre-market trading after the company announced the results.

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

President Glenn Hauenstein warned, “The recent surge in COVID cases linked to the omicron variant is expected to impact the pace of demand recovery early in the quarter, with recovery momentum resuming from the President’s Day weekend forward.”

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

  • Adjusted earnings per share: 22 cents versus expected 14 cents.
  • he won: $9.47 billion versus the $9.21 billion forecast.

Delta posted a net loss of $408 million in the fourth quarter as fuel and other costs rose, driven in part by disruptions from Omicron’s deployment. When adjusting for one-time items, Delta reported earnings per share of 22 cents, beating the 14 cents expected by Wall Street.

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

Delta is the first US airline to report fourth-quarter results and provide detailed forecasts of the impact of the variable on its business. Omicron’s rapid spread has affected industries from theater to restaurants to retailers and grocery stores.

Airlines, including Delta, have canceled thousands of flights since Christmas Eve, as a spike in COVID-19 cases among crews led to staff shortages.

Delta said its business has stabilized and that omicron has caused only 1% of its flights to be canceled over the past week.

The airline said Omicron would keep the lid on bookings for the near term.

“Despite expectations of a loss in the March quarter, we remain in a position to generate healthy profits in the June, September and December quarters, resulting in a meaningful profit in 2022,” Delta Chief Financial Officer Dan Janki said in the earnings statement.

Investors have largely ignored Omicron’s impact on carriers. Delta shares are up 3.9% this year through Wednesday, while US and US stocks are up 6.3% and 3%, respectively. By comparison, the S&P 500 is down 0.84%.

Delta expects first-quarter revenue to come in 24% to 28% below 2019 levels with a capacity of 15% to 17% lower than it soared three years ago. It expects a nearly 15% jump in costs compared to 2019, excluding fuel.

Airlines compare results with 2019 to show how much business has recovered from pre-pandemic levels.

Among the challenges for Delta and other airlines this year is ramping up staffing to meet travel demand, a challenge in a tight job market.

Delta executives will detail their results and expectations for 2022 on a 10 a.m. ET call.

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

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Andrew Naughtie

News reporter and author at @websalespromo