Delta Air Lines unveils disappointing fourth-quarter guidance, sending shares down

Investing.com -- Delta Air Lines (NYSE:DAL ) has unveiled current-quarter earnings guidance that missed analysts expectations, as the US carrier grapples with the fallout from a summer computer network outage and pricing pressures from overcapacity.

The company said it now expects to report fourth-quarter adjusted earnings per share of between $1.60 to $1.85, missing Wall Street estimates of $1.78 at the midpoint, according to Bloomberg News.

Total revenue in the period, meanwhile, is seen rising by 2% to 4%, with industry supply growth trends continuing to "rationalize," Delta President Glen Hauenstein said in a statement. Investors have been focused on recent overcapacity at Delta and its peers that has put downward pressure on fares.

Holiday bookings are "strong," Hauenstein added, although Delta expects to take a 1 percentage point hit to the number from reduced travel demand around the upcoming US election.

Shares in Atlanta-based Delta dipped in premarket US trading following the announcement.

In July, a system-wide meltdown stemming from a faulty update from cybersecurity group CrowdStrike (NASDAQ:CRWD ) led to widespread flight cancellations. Delta was particularly hard hit, cancelling 7,000 of flights over five days.

Delta said the direct financial impact from the incident was approximately $380 million, primarily driven by refunds given to customers in the form of cash and frequent flyer miles. Non-fuel expenses amount to $170 million, while fuel costs were $50 million lower than they would have been had the flights not been cancelled.

Third-quarter earnings per share were also dented by $0.45. However, Delta has said that, when excluding the outage, annual adjusted income will be around the midpoint of its $6 to $7 per share guidance range.

For its September quarter, the group posted adjusted per-share earnings of $1.50 compared to $2.03 in the year-ago period. Analysts had projected $1.52 a share. Quarterly adjusted revenue came in at $14.59 billion, versus expectations of $14.65 billion.

Source: Investing.com