On the second-quarter earnings report of Delta Air Lines, CEO Ed Bastian expressed concerns about financial challenges the airline is facing. Despite achieving near-record revenue, the company's financial performance did not meet the expectations of financial analysts.
As shared by Yahoo Finance, the company projected an adjusted profit between $1.70 and $2.00 per share, below the anticipated $2.05 average, and noted sales growth of up to 4% instead of the expected 5.8%.
Adjusted net operating income also slightly missed expectations at $1.528 billion, despite a record revenue excluding sales rise of 5.4% to $15.4 billion.
Delta Airlines Discounted Airline Tickets
Bastian cited major challenges within the aviation industry, particularly intensified competition in the low-cost carrier segment, which has led to widespread discounting of airline tickets. This trend, coupled with rising fuel costs and operational expenses, has exerted downward pressure on Delta's profitability.
While Delta Air Lines focuses on selling more business and premium tickets, positioning itself as a luxury-oriented airline, investors responded negatively to the company's recent financial announcements.
Delta's stock price fell by more than 5% to $44 by the close of trading on July 12, a reflection of investors' concerns about Delta's future profitability and financial outlook.
Analysts are also expressing concerns about the overall health of the airline industry, with Delta's recent financial performance expected to exert pressures on other carriers. Specifically, low-cost and ultra-low-cost airlines may face increased pressure to cut capacity further in response to Delta's financial results.
Looking ahead, Bastian expressed confidence in Delta's resilience, anticipating a stabilization in travel demand as the year progresses. Recently, VCPost reported that the airlines closed a deal with Riyadh Air for further US-Saudi aviation relations.
Join the Conversation