Main takeaways from Delta Air Lines’ (DAL) Q3 2024 earnings report

Shares of Delta Air Lines (NYSE: DAL) stayed red on Thursday after the company delivered mixed results for the third quarter of 2024. Earnings missed expectations while revenue came in line. The airline’s results included the impact from the outage related to cybersecurity firm CrowdStrike. Delta also expects revenues in the fourth quarter to dip slightly during the election. Here are the main takeaways from the Q3 report:

Earnings miss, revenue in-line

Delta’s operating revenue inched up 1% year-over-year to $15.7 billion in Q3 2024, coming in line with estimates. Adjusted operating revenue remained flat at $14.6 billion. GAAP EPS increased 15% to $1.97 in the quarter. Adjusted EPS fell 26% YoY to $1.50, missing the consensus target of $1.55.

Business performance

Delta’s total unit revenue decreased 3% in Q3 2024. However, it saw unit revenue growth improve sequentially across all its geographic segments through the September quarter. Capacity was up 4%. Passenger revenue per available seat mile (PRASM) was down 4%. Passenger load factor dipped 1 point to 87%.

In Q3, passenger revenue remained flat YoY but cargo revenue increased 27%. By region, domestic passenger revenue remained flat at $8.6 billion while Atlantic and Latin America revenues declined in the low single-digits. Pacific revenues increased 16%.

Delta is seeing strong demand for international travel as trends improved in Transatlantic and Latin America. Transatlantic unit revenues benefited from a rebound in demand for travel to Paris after the Olympics and Latin America revenues benefited from the company’s joint venture with LATAM in South America. The airline also saw growth in corporate travel sales during the quarter.

Non-fuel CASM increased 5.7% YoY while adjusted fuel price of $2.53 per gallon was down 9% YoY in Q3 2024.

CrowdStrike impact

The outage caused by CrowdStrike resulted in a direct revenue impact of approx. $380 million for Delta, driven mainly by refunds and compensation to customers for flight cancellations. The non-fuel expense impact was $170 million. Fuel expense was down $50 million than it would have been due to the flight cancellations over the five-day period.

Outlook

Delta expects unit revenue growth to improve through the December quarter and it is seeing strong bookings for the holidays. However, it anticipates a drop in travel demand during election time, which is expected to impact total unit revenue. For the fourth quarter of 2024, the airline expects total revenue to grow 2-4% YoY on capacity growth of 3-4%. Adjusted EPS is expected to be $1.60-1.85.