Delta Forecasts Strong Quarter Despite Ebola Threats
Delta Air Lines (DAL.N) claimed Ebola threats did not affect its bookings, thus, forecasting stronger quarter margins as the carrier increases its capacity throughout the Americas, while decreases growth of Pacific and transatlantic routes simultaneously.
On Thursday, the carrier estimated an operating margin between 10% and 12%, an 8.5% increase compared to a year-ago quarter. The forecast also included a 2% increase in its passenger revenues per seat per mile.
Most of the capacity alterations begin this winter as the Atlanta-based company has reduced seating capacities by 20%, which serve Tel Aviv, Moscow, and the Ebola-affected West Africa. These areas contribute to about 1% of the carrier’s overall capacity.
Through a conference call, Glen Hauenstein, Delta’s Executive Vice President said that they are daily monitoring the effects of Ebola, and not noticed any changes within the carrier’s booking trends.
United States airline stocks have indicated a plunge, reducing air travel due to Ebola fears. Meanwhile, Delta’s shares remained, which was down by 15% a month ago, despite recovering 2.9% on Thursday. Delta’s revenues came out better than expected.
During the third quarter, the carrier earned $1.20 per share, excluding special items. Based on Thomson Reuter’s data, the earning per share of Delta defeated the analysts’ estimate of $1.18 per share.
This winter, Delta will split its capacity growth throughout the Atlantic, ranging between 1% and 3%, thus, it will expand its partnership the Virgin Atlantic, expanding its capacity by 2.6%.
Additionally, the carrier plans on increasing its capacity to the Latin Americas by 15% this December, however, excluding Venezuela. Big plans also include route changes within Asia as it swaps its Boeing Co 747 for smaller planes, while slashes its seating capacity of low-yielding routes by 25% to 30% between Asian countries.
Delta said the retirements of its Boeing 747 will augment profits within the Pacific by $100 million the following year, although the company was charged with $397 million from these retirements just this quarter.
