Yahoo Finance says Delta's premium business couldn't blunt higher fuel prices in Q3.
Yahoo Finance reports Delta's Q3 earnings missed expectations and the airline cut its outlook, citing higher fuel costs. It says Delta's premium business couldn't blunt those higher prices.
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Delta reported adjusted earnings of $1.72 per share for the September quarter, four cents below analysts' average estimate, Reuters reported. The airline also cut its full-year adjusted earnings forecast to $5.10 to $5.60 per share, down from the $6.50 to $7.50 range it issued in July.
Delta expects its annual fuel bill to rise by roughly $6 billion from last year, about $2 billion more than it projected in July, according to Reuters. The company's quarterly results show adjusted fuel expense climbed 62% from a year earlier to $4.1 billion. Its adjusted fuel price rose 60% to $3.61 per gallon.
Strong revenue did not erase the profit pressure. Delta posted record adjusted revenue of $17.6 billion, up 16% from a year earlier, while premium revenue grew 18%. The airline said broad demand remained strong, but those gains were not enough to prevent the lower profit outlook.
Delta's Philadelphia-area refinery provides some protection from the jump in fuel prices. Reuters reported that the company expects the refinery to deliver a benefit of more than $700 million this year. Even with that offset, Delta projects an all-in fuel price of about $4.25 per gallon in the fourth quarter.
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For the December quarter, Delta forecast adjusted earnings of $1.15 to $1.65 per share and revenue growth of about 20% from a year earlier. Reuters said more than 60% of the quarter was already booked, with premium and corporate travel continuing to show strength.
In its full-year guidance, Delta said it expects about $2.5 billion in free cash flow and roughly $4.5 billion in adjusted pretax profit.
