The National Times - Delta profits drop despite solid demand, hitting airline shares

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Delta profits drop despite solid demand, hitting airline shares

ECONOMY 11.07.2024

Delta profits drop despite solid demand, hitting airline shares / Photo: © GETTY IMAGES NORTH AMERICA/AFP/File

Delta reported lower quarterly profits Thursday despite still-strong travel demand as it moderated a plan to add capacity in the fall in light of industry overcapacity.

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The big US carrier, which saw jet fuel and salary costs increase in the second quarter, also projected lower than expected third-quarter profits, hitting airline shares amid investor concerns over weakening airline fares.

Executives offered an upbeat outlook on demand during a conference call, but the company also described growth as "normalizing" after a huge uptick following Covid-19 lockdowns.

"Travel remains a top purchase priority, and Delta's core customers are in a healthy position," Chief Executive Ed Bastian said on a conference call with analysts.

Profits for the quarter ending June 30 were $1.3 billion, down 29 percent.

Revenues rose seven percent to $16.7 billion, a record for the June quarter.

The company confirmed its full-year projections, but its third-quarter profit forecast range was below median analyst estimates.

Bastian expressed confidence in a "more constructive industry backdrop" in the second half of 2024 as rival carriers focus on profitability through higher fares

Delta now expects third-quarter capacity growth of five to six percent, a bit below the increase in the second quarter.

Bastian emphasized Delta's efforts to win over premium consumers in a market in which "value" has shifted from the lowest price to a "better quality experience" that includes a focus on reliability.

The company is investing in new customer lounges in Boston, Los Angeles and Seattle and in programs to improve in-flight Internet service.

Shares of Delta fell 6.3 percent in morning trading. Rival carriers United Airlines and American Airlines also fell.

Lewis--TNT

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