Delta's Shares Dip Amid Competitive Fare Reductions

Delta Air Lines anticipates record revenue for the third quarter driven by strong summer travel demand. However, the projection fell short of expectations as fare discounts offset expanded flight capacity. 

The airline expects a sales increase of no more than 4%, below the 5.8% growth forecast by analysts. Adjusted earnings per share are projected between $1.70 to $2, missing the $2.05 estimate. This news led to an 8% drop in Delta's shares in early trading, with other U.S. airlines also experiencing declines.

Despite its position as the most profitable U.S. carrier, Delta's report highlights challenges for competitors in the oversupplied U.S. air travel market. For Q2, Delta's adjusted earnings per share matched Wall Street's expectations at $2.36, and adjusted revenue reached $15.41 billion, slightly below the $15.45 billion anticipated. The airline reported a net income decrease of nearly 30% to $1.31 billion, or $2.01 per share, with a 10% rise in operating expenses.

Revenue from international travel remains robust, though increased competition has impacted unit revenue for trans-Atlantic flights, with a 1-percentage point hit anticipated due to the Paris Summer Olympics, equivalent to around $100 million. Premium ticket sales surged 10% to $5.6 billion in Q2, while coach ticket revenue grew by 0.3% to approximately $6.7 billion. Revenue from Delta's American Express credit card deal rose 9% to $1.9 billion.