Source: Wall Street See
During the peak summer travel season in the United States,$Delta Air Lines (DAL.US)$However, the third-quarter performance guidance fell short of expectations. The stock price fell sharply before the market opening, dragging down the entire U.S. aviation industry.
On July 11th, before the pre-market trading in the U.S. stock market opened, Delta Air Lines released its financial report. In the three months ending on June 30th, Delta Air Lines' adjusted revenue was $15.4 billion, a year-on-year increase of 5.4%, which was lower than the expected $15.45 billion. The operating costs increased by 10% compared with the same period last year.
Net income decreased by nearly 30%, to $1.31 billion, or $2.01 per share. After adjusting for one-time items, Delta Air Lines announced a profit of $1.53 billion, or $2.36 per share, which was in line with analysts' expectations.
However, due to Delta Air Lines' profit guidance for the third quarter falling short of expectations, its stock price fell by as much as 10% before the market opening. The main board fell by more than 9%, and the stock prices of other U.S. airlines also declined.$American Airlines (AAL.US)$falling by more than 6%,$Alaska Air (ALK.US)$down more than 3%.
Due to strong demand for summer travel, Delta Air Lines expects to achieve its highest revenue in the third quarter, but profits are under pressure due to discounted ticket prices, rising costs and increased capacity.
Data from the London Stock Exchange shows that Delta Air Lines expects adjusted earnings per share for the third quarter ending in September to be between $1.70 and $2.00, while analysts expect $2.05. At the same time, compared with the same period last year, the airline expects its third-quarter flight capacity to increase by 5% to 6%, which is lower than the second-quarter growth rate of 8%.
Delta Air Lines reiterated its full-year earnings expectation of $6-7 per share and expects to generate up to $4 billion in free cash flow.
"The second quarter was very strong," said CEO Ed Bastian in an interview, but increased competition in the domestic market and increased ticket discounts have affected the company's revenue.
The prosperity of the aviation industry has not improved the profitability of most U.S. airlines due to oversupply of industry capacity and weakened pricing power. Data from consulting firm Cirium shows that the domestic seat capacity of major airlines this month has increased by about 6% compared with the same period last year.
This has restrained airline ticket prices. According to data from airline reporting company ARC, the average round-trip ticket price for domestic flights in the United States in May was $543, a decrease of 1% from the previous month and 3% from the same period last year.
Due to discount pressure, American Airlines and$Southwest Airlines (LUV.US)$have lowered their revenue forecasts for the second quarter.
Editor / jayden