On Oct. 10, Delta Air Lines (DAL) released third-quarter earnings that both the airline and analysts classified as disappointing. Revenue was $14.59 billion instead of the expected $14.68 billion, while adjusted net income was $971 million instead of the $981 million initially anticipated.
The biggest factor behind these numbers, Delta’s chief executive Ed Bastian told investors, came down to the July CrowdStrike outage that left airline check-in computers around the world with the “blue screen of death” and caused nearly a week of disruption to Delta’s flight schedule.
Related: Delta earnings reveal true cost of CrowdStrike meltdown
“We had 86 great days, and we had five days that were impacted, caused by CrowdStrike,” Bastian said in a follow-up interview with Yahoo Finance. “That was not something that was attributable to our business or our performance, it was something that was done to us.”
Delta expects ‘reduced travel demand around the election’ (just like in the past)
Looking ahead into the fourth quarter, Bastian expects the U.S. presidential election to sow similar disruption upon the airline’s earnings as a certain number of people put off their travel plans for until after Nov. 5. The airline expects a revenue drop of one point from the election in total.
More Travel:
A new travel term is taking over the internet (and reaching airlines and hotels)The 10 best airline stocks to buy nowAirlines see a new kind of traveler at the front of the plane
Delta President Glen Hauenstein said this is caused by “reduced travel demand around the election” that is expected to ramp up again during the rush of Thanksgiving and then later holiday travel.
The good news reported by the airline on Oct. 10 was that the net income of $1.27 billion for the quarter ending on Sept. 30 was still 15% higher than a year ago.
High traveler numbers spell optimism for the airline’s financial future even if the latest quarter’s performance was influenced by both the CrowdStrike disruption and the slow bounceback of corporate travel. Delta calculated that the outage cost it $380 million in lost revenue that then translated into $0.45 lost earnings per share.
Delta shares stayed unchanged upon release of the earnings.
Related: Get the best cruise tips, deals, and news on the ships from our expert cruiser
‘Consumers will, I think, take a little bit of pause in making investment decisions’
“Through the September quarter, unit revenue growth improved sequentially in all geographic entities, reflecting an improved equilibrium between demand and supply as industry growth moderated,” Hauenstein said further. “For the December quarter, we expect the improved trends to continue and bookings for the holiday period are strong.”
When it comes to both past-quarter and upcoming destination trends, Delta said it benefited from the boost of travelers headed to Paris for the Olympic Games and has been seeing an increase in demand for Latin American destinations such as Chile, Brazil and Peru.
Delta recently partnered with South American carrier LATAM Airlines (LTMAQ) to connect passengers from the U.S. to more flights on the South American continent that it further hopes will lead it toward “double-digit revenue growth.”
“We do anticipate seeing a little choppiness around the election, which we’ve seen in past national elections,” Bastian said in another interview. “Consumers will, I think, take a little bit of pause in making investment decisions, whether it’s discretionary or other things. I think you’re going to hear other industries talking about that as well.”
Related: Veteran fund manager sees world of pain coming for stocks
