Delta Air Lines (DAL) experienced a significant decline in its share price following the release of its third-quarter earnings report, which failed to meet analysts’ expectations. The airline posted adjusted earnings per share (EPS) of $1.50 on revenue of $15.68 billion, falling short of the consensus estimates compiled by Visible Alpha. This disappointing performance, combined with the lingering effects of a major IT outage, contributed to a 3% drop in Delta’s shares before the market opened.
The third quarter was particularly challenging for Delta, not just due to lower-than-expected earnings but also because of substantial operational disruptions. In July, a global IT outage caused by CrowdStrike led to the cancellation of approximately 7,000 Delta flights over a five-day span. This incident not only affected passenger travel but also incurred significant costs for the airline, with Delta confirming that it expects to bear approximately $500 million in expenses related to the outage. These financial repercussions are likely weighing on investor sentiment, adding to concerns about operational reliability in an industry that thrives on punctuality and customer trust.
In addition to its disappointing Q3 results, Delta provided a less-than-optimistic outlook for the fourth quarter. The airline projected revenue growth of only 2% to 4%, which is below market expectations and raises questions about its ability to sustain momentum amid rising costs and operational challenges. Such guidance reflects ongoing uncertainties within the travel sector, particularly as the industry grapples with fluctuating demand and potential economic headwinds.
Despite a strong year, with Delta shares climbing over 25% through Wednesday’s close, the combination of missed earnings, the financial impact of the IT outage, and a cautious revenue outlook has led to a palpable shift in investor confidence. Market analysts will be watching closely to see how Delta addresses these challenges moving forward, especially as the airline sector prepares for the traditionally busy holiday travel season.
