Delta Airlines is another North American airline that is continuing to make a profit in the three months leading up to September 30th 2022. We know that the airline first moved into the black in the second quarter leading up to June 30th. This was also the case with other North American airlines as well including American Airlines and Southwest Airlines. The Covid pandemic has taken a terrible toll on many airlines. However, most are starting to recover and are gradually returning to pre-pandemic levels.
Delta Airlines’ Financial Performance
In the case of Delta Airlines, it is still making a profit. However, according to the accounts which are prepared according to generally accepted accounting principles, the profit made was less than in the three months period up to June 30th 2022 (the second quarter). In the second quarter, Delta Airlines had a net income of 735 million US dollars, which was far better than the loss of 940 million US dollars in the first quarter leading up to March the 31st 2022. However, this time around, in the three months up to September Delta Airlines made a net income of 695 million US dollars which is approximately 5.4% less than the profit made in the second quarter. As one can see therefore Delta Airlines is still making a profit but its performance has reduced.
In response to this, Dan Janki, the Chief Financial Officer of Delta Airlines, has said that the company has still done well despite costs relating to the rebuilding efforts taking place in the airline as the company recovers from the pandemic. Janki also suggests that inflationary pressures are also causing issues for the airline, presumably because costs are higher. Operating costs (costs from its activities) for the third quarter of this year amounted to 12.519 billion US dollars compared with 12.305 billion dollars for the second quarter. This indicates a rise in costs of 1.7%. Fuel costs have also risen from 3.223 billion US dollars in the second quarter to 3.318 billion US dollars in the third quarter which is a rise of 2.9%. As we know, the war in Ukraine has led to a spike in fuel costs.
Delta Airlines’ Revenue
In terms of revenue (total money received from services provided), Delta Airlines made 13.975 billion US dollars in the third quarter of 2022 when compared with 13.824 billion US dollars in the second quarter. This indicates that even though the actual profit of the company has reduced in this quarter when compared to the second quarter, the total money coming in is in fact more now. Revenue has increased by approximately 1.1%. This means that the reason why profitability is less is due to the increase in costs. On a positive note, however, the adjusted figures indicate that net income has increased from 921 million US dollars to 966 million US dollars. This suggests that Delta Airlines has been managing its money better – for example, by hedging, as well as using other investment strategies (for example investing in other companies or other high-interest-bearing bank accounts or bonds).
As one can see Delta Airlines’ revenue has increased between the second and third quarters. However, profitability has reduced. This indicates that there has been an increase in expenses which Chief Financial Officer Dan Janki puts down to the costs of rebuilding as well as inflationary pressures. We have to wait to see how this progresses.
