Delta Air Lines guided lower on Thursday after missing earnings estimates for the third quarter. Delta stock dropped near a buy point.
The Atlanta-based company, one of the most profitable U.S. carriers, kicks off airline earnings season. This week, airlines stocks came under pressure as Hurricane Milton forced thousands of flight cancellations and delays across the industry.
On an earnings call Thursday, CEO Ed Bastian said Delta canceled 600 flights over two days due to Milton. "We'll have a better sense of the impact as we learn of how our airports fared overnight," he said during the call.
Asked by an analyst about Milton's financial impact, Bastian added: "It's too early to give you that. We have to see what happens. If we're fortunate and it's moved out quickly, it will be modest."
In Q3, Delta took a 45-cent hit to earnings from the CrowdStrike technology outage that led to mass flight cancellations.
Delta Air Lines Earnings
For Q3, Delta earnings slumped 26% to $1.50 a share, slightly worse than feared. Revenue rose 1% to $15.677 billion, slightly above views but slowing for a second sequential quarter. The company noted that the CrowdStrike outage, which canceled 7,000 flights over a five-day period, caused a $380 million impact to Q3 revenue, primarily driven by refunding canceled flights and compensating customers.
Analysts had expected Delta EPS of $1.52 on revenue of $15.595 billion, according to FactSet.
Early Thursday, Delta projected Q4 earnings of $1.60-$1.85, with the $1.725 midpoint below analyst consensus of $1.76. The airline carrier expects revenue to range from $13.9 billion to $14.2 billion, up 2%-4% but shy of FactSet views for $14.83 billion. It said holiday bookings are strong but anticipates lower travel demand around the U.S. presidential elections in November.
"Industry supply growth continues to rationalize, positioning Delta well in the final quarter of the year and as we move into 2025," Delta Air Lines said in a news release. A flight glut sent fares lower over the summer.
Delta Stock Falls Near Buy Point
Shares of Delta Air Lines lost 1% to 50.30 in big volume on the stock market today. Delta stock has a 52.45 cup-with-handle buy point, now about 4% below the entry.
The 20-week cup-with-handle base shows a 6% gap-up advance in big volume on Sept. 26. That was the same day Southwest Airlines hiked revenue guidance and guided fuel costs lower.
It also shows a sharp slump in early August, when Delta warned of a $380 million Q3 revenue hit from the CrowdStrike outage. The relative strength line for Delta stock is trending higher but remains far below the consolidation peak.
Delta Air Lines earns an 81 RS Rating. That means it has outperformed 81% of all stocks in IBD's database over the past year.
As Delta tries to break out, airline stocks at large are in the middle of a steep nine-week rally. United Airlines is set to report on Oct. 15, and Southwest Airlines reports on Oct. 24. Shares of United Airlines and Southwest Airlines both rose on Thursday.
In the bigger picture, the entire travel sector is rebounding aggressively, including cruise lines such as Royal Caribbean (an IBD 50 top growth stock), travel booking sites and hotels. Analysts at Citi said on Wednesday that the recent rally for cruise stocks "has real legs" into 2025 and beyond.
Airlines Assess After Hurricane Milton
Airlines and airports were assessing damage to various Florida airports after Hurricane Milton tore across the state on Wednesday night. As of Thursday afternoon, Tampa International Airport and St. Pete-Clearwater International Airport, just outside of Tampa, remained closed. Orlando International Airport, Orland Executive Airport and a number of smaller airports also remained closed.
Flight tracker FlightAware reported 2,800 U.S. flights canceled as of Thursday afternoon, with more than 14,000 delays. Orlando International accounted for 485 of the cancellations. 233 flights were canceled in and out of Tampa International.
An earlier storm, Hurricane Helene, killed 227 people, with more believed to be dead. This month, the back-to-back hurricanes are hurting airline traffic, Transportation Security Administration data show.
After Delta's Q3 report on Thursday, at least two analysts raised their price targets on Delta stock, FactSet shows. The consensus rating among 22 analysts is buy with a $61.89 price target, implying a 25% return from Thursday's intraday price.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
