Delta Air Lines (NYSE: DAL) has released its financial results for the third quarter of 2024, showcasing impressive performance and a positive outlook for the remainder of the year. Despite facing challenges, the airline continues to lead the industry both operationally and financially.
September Financial Performance
The September quarter saw Delta achieve a double-digit operating margin, demonstrating the company’s ability to maintain profitability in a competitive market.
Year-to-date free cash flow generation reached nearly $3 billion, indicating robust financial health and operational efficiency.
CrowdStrike Outage Impact
The airline faced a significant challenge in the form of a CrowdStrike-caused outage, which resulted in a $380 million impact on September quarter revenue. This impact primarily stemmed from refunding customers for cancelled flights and providing compensation in cash and SkyMiles.
Improving Revenue Environment
Delta’s President, Glen Hauenstein, highlighted the improving industry backdrop and strong travel demand. The September quarter saw sequential improvement in unit revenue growth across all geographic regions.
This positive trend reflects a better balance between demand and supply as industry growth moderated.
Employee Recognition
In a move that underscores the company’s commitment to its workforce, Delta has set aside almost $1 billion for profit sharing.
This substantial sum is earmarked for the upcoming February payout. It recognizes the exceptional efforts of Delta employees throughout the year.
September Operations, Network & Fleet
- Operated the most on-time airline year-to-date, leading competitive set in on-time departures and arrivals and network peers in completion factor
- Took delivery of 27 aircraft year-to-date and nine in the September quarter, including the A321neo, A330-900 and A350-900
- Building on record performance in 2024, Delta announced its Transatlantic summer schedule for 2025, offering over 700 weekly flights to 33 destinations, including seven new routes
- Signed codeshare agreement with Scandinavian Airlines System (SAS), expanding connection opportunities between North America and Scandinavia. A second codeshare with Saudia Airlines expands destination options between North America and the Arabian Peninsula
- Announced first-ever nonstop service from SLC – ICN beginning next summer, growing Delta’s global network and providing connections to key destinations across Asia
- Introduced five new routes from Austin, Texas, beginning in March 2025.
- Announced five new routes including two new destinations to Mexico this winter, building on Delta’s partnership with Aeromexico.
Positive Q4 Outlook
Looking ahead to the fourth quarter, Delta’s CEO Ed Bastian expressed optimism. The airline expects its December quarter pre-tax profit to grow by 30% compared to last year.
This is projected as potentially reaching $1.4 billion. If achieved, this would mark one of the most profitable fourth quarters in Delta’s history.
Holiday Bookings and Election Impact
Bookings for the holiday period are reported to be strong, indicating continued consumer confidence in air travel. However, Delta anticipates a 1% impact on total unit revenue due to reduced travel demand around the election period.
Q4 Revenue and Capacity Projections
For the December quarter, Delta projects total revenue growth between 2% and 4% compared to the previous year. This growth is expected to occur alongside a capacity increase of 3% to 4%.
The airline notes that industry supply growth is rationalizing, which bodes well for Delta’s position in the final quarter of 2024 and moving into 2025.
International Market Strength
Delta’s international segment continues to show strength, with positive trends particularly evident in Transatlantic routes. The airline saw unit revenues turn positive in September for both Domestic and Transatlantic markets.
Latin American revenue benefited from the maturing joint venture with LATAM in South America. Meanwhile, the Pacific network is undergoing restoration with notable growth in travel to South Korea and Japan.
Conclusion
Despite facing operational challenges, Delta Air Lines has demonstrated resilience and strong financial performance in the third quarter of 2024. With a positive outlook for the fourth quarter and strategic positioning in key markets, Delta appears well-equipped to capitalize on the improving industry landscape and maintain its leadership position in the airline sector.
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