Delta Air Lines reports 26 percent decrease in Q3 earnings
Date
10/13/2024 4:04:20 AM
(MENAFN) Delta Air Lines reported a significant decline in third-quarter earnings, with profits dropping 26 percent amid challenges from a global technology outage that resulted in thousands of flight cancellations. The airline's net income for the quarter was USD971 million, a decrease from USD1.31 billion during the same period last year. While Delta experienced a slight increase in revenue, the rise in expenses—particularly for labor, airport landing fees, and costs associated with its Delta Connection regional affiliate—outpaced revenue growth, contributing to the drop in earnings.
Following the earnings report, Delta's shares fell nearly 6 percent in pre-market trading, which in turn affected other airlines' stock prices as well. Despite the setback, Delta expressed optimism about a return to year-over-year earnings growth in the upcoming quarter. The airline anticipates that it will gain from a reduction in flight capacity from lower-cost competitors and is actively pursuing compensation for the USD500 million loss incurred due to the July technology outage.
CEO Ed Bastian indicated that booking numbers for the Thanksgiving and Christmas travel periods are looking strong. However, he also noted that a temporary decline in travel spending may occur as consumers express uncertainty about the outcomes of the upcoming November elections. The July outage was traced back to a faulty software update deployed by CrowdStrike, a cybersecurity firm, which impacted numerous businesses globally, including airlines. Delta faced particular challenges in recovering from this incident, leading to a U.S. Department of Transportation investigation into the airline's slower response compared to its competitors.
The impact of the technology outage, combined with the rising operational costs, has underscored the complexities faced by Delta as it navigates a turbulent recovery phase in the aviation industry. As the company looks ahead, its strategies to mitigate these issues and capitalize on upcoming travel demand will be crucial in restoring investor confidence and enhancing its financial performance.
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