Rosalind Evans
The turbulence in the airline industry continues as Delta Air Lines announced a downward revision to its 2024 earnings forecast, causing a ripple effect across the market. Investors were left reeling as Delta’s shares plummeted by approximately 7% on Friday. This move has had a domino effect on other major carriers, including United, American, and Southwest, who also witnessed significant drops in their stock prices following the new earnings estimate. Amid this uncertainty, Delta’s CEO, Ed Bastian, remains optimistic about the future of air travel and anticipates a potential turning point in the industry this year.
Delta Air Lines shares slipped about 7% Friday after trimming its 2024 earnings forecast.
Delta forecast full-year earnings per share of $6 to $7, below its previous estimate of more than $7 per share for 2024.
Other major airlines, including United, American, and Southwest, also fell on the new estimate, released alongside quarterly earnings. United and America were down about 8% each, while Southwest fell more than 3%.
Delta finished 2023 by doubling its quarterly profit as corporate and leisure travel bookings continued to pick up from the pandemic lows. The company reported $2.04 billion in net income in the fourth quarter, sharply up from the $828 million reported in the year-ago period.
In a CNBC interview, Delta CEO Ed Bastian said the airline has recovered almost 90% of its travel demand from its pre-pandemic numbers. Bastian said he expects strong growth in international travel as Americans continue to set their sights on overseas destinations.
“We expect to see an inflection point in the first part of this new year in terms of our domestic unit revenues turning positive,” Bastian said.
Delta is coming off a strong 2023, where shares surged more than 20%, but the stock is still down from its all-time high of $63.16, notched in July 2019. The stock was trading at around $39 per share on Friday.
The airline industry, still grappling with the lingering effects of the pandemic, faces fresh challenges with Delta’s downward revision of its profit forecast. The sudden dip in stock prices for Delta and other major carriers underscores the ongoing volatility in the market. Despite the setbacks, Delta CEO Ed Bastian remains hopeful that the industry will see better days ahead, with a strong rebound in international travel on the horizon. As investors monitor these developments closely, the fate of airline stocks remains uncertain, but the industry’s resilience may prevail as it navigates these turbulent times.
