Delta Air Lines Posts Drop in Earnings Due to Technology Outage


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Delta Air Lines posted a drop of 4.4% in its third quarter net income on Thursday, after losing more than $150 million of income from a tech outage during August.

Delta’s net income for the quarter ending the end of September was $1.26 billion equal to $1.70 per share. That met expectations of analysts.

Delta’s revenue from operations reached $10.5 billion, but was $624 million or 5.6% less for the quarter compared to last year’s third quarter. That included more than $100 million lost during a technology outage, said officials from the airline.

The remainder of the loss due to technology was because of subsequent recovery in operations after more than 2,300 flights had to be canceled during a three-day period.

The resiliency of Delta stood out in the quarter as it worked through the tech outage, continued headwinds in revenue and volatile prices of fuel to produce the best operational reliability in the industry for customers as well as solid cash flows, margins and returns for owners, said Ed Bastian the Delta CEO in a prepared statement.

Revenue was also hit from hedging against the yen currency in Japan, with over $70 million less than the same period last year.

Passenger unit revenue was down by 6.8%, including by 2% from just the tech outage and the yen hedges, on a capacity increase of 1.5%.

However, fuel continued to be inexpensive. The fuel cost of $1.4 billion for the just ended quarter was lower by 22% than the same three months in 2015.

While the airline was encouraged by its unit revenue trends to the end of September, more work is ahead to achieve a goal of positive unit revenue, said Glen Hausensein the airline’s president.

Shares of Delta have dropped by 23% since the start of 2016, while at the same time, the S&P 500 Index has increased by 5%.

The Delta earnings report comes a pair of days after Richard Anderson the executive chairman abruptly departed. Anderson was on the board almost a decade and was CEO during 2007. He retired from that post in May to become the executive chairman, but made an announcement on Tuesday that his departure was immediate.

Anderson was succeeded by former Home Depot CEO Francis Blake.

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