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Oil prices have surged to hit multi-year highs, threatening the pace of a recovery in the airline industry. Fuel costs alone accounted for nearly 20% of Delta’s adjusted operating expenses in the third quarter.
The carrier, however, expects to benefit from strong holiday demand and an improvement in international and corporate travel as the United States reopens its borders in November to fully vaccinated travelers from 33 countries, including China and most of Europe.
“Going into 2022, investors seem likely to ponder the pace of the demand recovery, especially on the Trans-Atlantic corridor, balanced against recent crude oil price pressure,” Citi analyst Stephen Trent said in a pre-earnings note.
Third-quarter revenue from transatlantic travel was at 35% level of the comparable period in 2019, the airline said.
Delta, the first major U.S. airline to report financial results, forecast adjusted fuel price per gallon of between $2.25 and $2.40 for the fourth quarter. The adjusted fuel price per gallon was $1.94 in the latest quarter.
Adjusted operating revenue for the third quarter fell 34% to $8.28 billion from 2019 as a fast-spreading Delta variant cut demand for air travel in August and early September.
Analysts on average estimated $8.40 billion, according to Refinitiv data.
Net income fell to $1.21 billion, or $1.89 per share, in the three months ended Sept. 30 from $1.50 billion, or $2.31 per share, in 2019.
Excluding items, the company earned $194 million, or 30 cents per share.
