Third-quarter earnings fell 26% at Delta Air Lines, which struggled to overcome a global technology outage that led to thousands of flight cancellations, and indications that growth in air travel is beginning to slow.
Delta earned $971 million, down from $1.31 billion a year earlier. Revenue rose slightly, but spending on labor, airport landing fees and its Delta Connection regional affiliate grew much faster, the Atlanta airline said Thursday.
The airline said, however, that it will return to year-over-year earnings growth in the October-December quarter. Delta figures to benefit from a pullback in flying by lower-cost competitors, and the airline is seeking compensation for the July outage that cost it $500 million.
CEO Ed Bastian said bookings for Thanksgiving and Christmas are strong, but he expects a brief drop in travel spending before the holidays while Americans fret about the outcome of the November elections.
Air travel has bounced back from the pandemic to record levels. There are signs, however, that the recovery may be losing momentum.
More travelers are showing up at U.S. airports than last year, but the trend has grown weaker each month since spring. In May, the Transportation Security Administration screened 6.9% more travelers than it did a year earlier. By September, the increase had dwindled to 1.7%, and the first nine days of October showed a 3.2% decline from last year.
Delta reported that its customers flew 3% more in the July-through-September quarter than a year earlier, but on average they paid 3% less per mile.
That is because airlines have lost pricing power on economy-class tickets. Low-fare carriers in particular added flights so fast this year that they cut prices to fill seats. Some of them — notably Spirit Airlines, which is trying to renegotiate debt to avoid bankruptcy — have cut their schedules for the last few months of 2024.
