Delta posts profit but warns rising fuel prices will squeeze 4Q bottom line

Delta Wednesday reported a quarterly profit and higher-than-expected revenue for the third quarter, but warned that more expensive fuel will pressure its bottom line in late 2021 despite improving travel demand. “At present time, we’re expecting a modest loss in the fourth quarter,” CEO Ed Bastian said on a quarterly call with analysts on Wednesday. Delta said it expects its costs, before fuel expenses, to rise 6% to 8% in the fourth quarter as it ramps up flying. The carrier said it would fly 80% of its 2019 capacity, up from 71% in the most recent quarter. It expects fuel prices to rise to $2.25 to $2.40, from the average $1.97 a gallon in Q3. The airline, however, said it expects revenue to continue to recover during the last three months of the year, to a little bit less than three-quarters of the $11.4b it brought in the same quarter in 2019, before the coronavirus pandemic. The carrier said customers were willing to pay for “premium” seats, which the company defines as everything from its extra-legroom seats in coach to its Delta One suites on long-haul flights. Delta said the percentage of customers paying for those types of seats, as opposed to upgrades, was higher than September 2019, but declined to give more details. Delta’s Q3 profit of $1.2b, which was down 19% from 2019, was its second profit since the pandemic but the first one without US aid. Delta and other airlines received billions of dollars in federal assistance to keep them afloat during the crisis. <br/>