Delta Air Lines Profit Forecast: Delta Air expects profit boost betting on capacity, cost controls, ET TravelWorld
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Delta Air Lines said on Thursday its bookings have stabilized, prompting it to forecast a brighter profit outlook for coming quarters, even as pricing pressures continue to weigh on industry margins. Shares of the carrier jumped 13 per cent in premarket trading after the airline said it expects industry-wide capacity discipline to support airfares. Peers United Airlines and American Airlines were also up over 8 per cent .Domestic rival Southwest Airlines rose 3.4 per cent . Like most US airlines, the Atlanta-based carrier pulled its full-year 2025 financial forecast in April as President Donald Trump's trade war dented consumer and business confidence, hitting bookings.Since then, industry executives say travel demand has stabilized. Passenger traffic in the US, however, is still down from a year ago, leading to a decline in airfares, government data shows. Delta's second-quarter earnings report reinforced that view. The company said its bookings have stabilized and are now flat to last year. But its pricing power remains under pressure, particularly in the US domestic market.Carriers plan to slash capacity after July to match the supply of airline seats with demand to prevent more discounting pressure. Delta said the capacity rationalization is expected to improve unit revenue, a proxy for pricing power, through the second half of the year.The company is also leaning on cost-control measures to protect margins. It expects non-fuel operating costs to be flat-to-down in the third quarter from a year ago.CEO Ed Bastian said the airline was focused on "managing the levers within our control to deliver strong earnings and cash flow."Delta forecast an adjusted profit of USD 1.25 to USD 1.75 a share for the quarter ending September. The midpoint of the forecast is USD 1.50 per share, compared with the analysts' average estimate of USD 1.31, according to data compiled by LSEG.For the full year, the company expects adjusted earnings in the range of USD 5.25 a share to USD 6.25 a share. That compares with a profit of USD 5.39 per share expected by analysts. While a slump in travel demand has left all US carriers reeling, a diversified revenue stream, strong demand for premium travel and the growing value of customer loyalty programs have helped Delta and rival United Airlines perform better.For example, Delta's premium ticket revenue was up 5 per cent year-on-year in the second quarter even as its main-cabin ticket revenue declined from a year ago. Its loyalty revenue was up 8 per cent year-on-year."Diverse revenues buffering company from weak main cabin demand," TD Cowen's Tom Fitzgerald wrote in a note."Delta's guidance is encouraging for other full-service carriers, but we would hesitate on overextrapolating the guidance for airlines without premium/diverse revenues."It reported an adjusted profit of USD 2.10 a share in the quarter through June, compared with analysts' average estimate of USD 2.06 per share, according to LSEG data.
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