Delta reports first adjusted profit since before the pandemic, but fuel price rise could pressure profitability; stock falls

Shares of Delta Air Lines Inc. (NYS:DAL) dropped 1.5% in premarket trading Wednesday, after the air carrier reported its first adjusted profit since the COVID-19 pandemic, and which was double what was expected, but said the recent rise in fuel prices will pressure its ability to remain profitable in the fourth quarter. Net income was $1.21 billion, or $1.89 a share, compared with $1.50 billion, or $2.31 a share, in the same period in pre-pandemic 2019. Excluding nonrecurring items, such as a $1.3 billion benefit related to government payroll support, adjusted earnings per share came in at 30 cents, beating the FactSet consensus of 15 cents. Total revenue was $9.15 billion, down 27% from the same period in 2019, but beat the FactSet consensus of $8.38 billion. Load factor fell to 80% from 88%, but beat the FactSet consensus of 78%. Capacity for the quarter was 71% of what it was in the same 2019 quarter. Adjusted fuel price was $1.94 per gallon, down 8% from the second quarter, but that is expected to rise to $2.25 to $2.40 per gallon i the fourth quarter. The company also expects fourth-quarter capacity to be 80% of 2019 levels. "Generating a profit for the quarter even with a majority of our corporate and international customers still to return is a great achievement," said President Glen Hauenstein. He expects holiday travel demand to be "robust," and expects improvement in corporate and international demand. Delta's stock has gained 8.3% year to date through Tuesday, while the U.S. Global Jets ETF (PSE:JETS) has tacked on 7.2% and the S&P 500 (S&P:SPX) has advanced 15.8%.