AP – Delta Air Lines said recently that it earned USD828 million in the fourth quarter (Q4) and that consumers are still snapping up flights and making purchases with their airline-branded credit cards.
The Atlanta-based airline said momentum has carried over into the new year, as the travel industry continues to recover from the worst of the pandemic. Delta shares closed down 3.5 per cent on Friday, however, after the airline gave a disappointing outlook for first-quarter earnings. Chief Executive Officer (CEO) Ed Bastian said the forecast included the estimated cost of a new contract for pilots, which is awaiting a ratification vote, while many analysts did not consider that expense in their predictions.
Delta’s report came a day after American Airlines delivered a rosy update on its fourth quarter, saying that rising revenue would push earnings per share to nearly double the amount that Wall Street expected.
Both carriers and other United States (US) airlines have been helped by strong demand for travel and a limited number of flights – a combination that has pushed fares higher.
Airlines say that a shortage of pilots, especially at regional feeder airlines, has curtailed their ability to operate more flights. However, Delta expects to be operating at around full pre-pandemic levels by this summer. Investors are starting to worry that as airlines become convinced that the travel recovery is permanent, they will add flights in a bid to grab a bigger share of the market and wind up driving fares lower.
That is good for travellers but bad for airline investors, and it has happened many times in the industry.
