Delta Airlines: Despite Turbulence on a Stable Course

Delta Airlines recently presented its fourth-quarter forecasts, which fell short of expectations following a dramatic technical failure in the summer, significantly involving CrowdStrike Holdings and Microsoft. However, the airline anticipates a profit increase in the fourth quarter due to strong holiday demand, despite uncertainties in air travel caused by the elections. In the third quarter, ending September 30, Delta had to endure a revenue loss of $380 million due to the CrowdStrike failure, which reduced earnings by $0.45 per share. The system restoration resulted in thousands of Microsoft Windows machines going offline and several thousand flights being canceled. Additionally, Hurricane Helene disrupted flight schedules, reducing earnings by another $0.03. Revenue increased by 1.2% to $15.68 billion, while adjusted revenue was $14.59 billion, just below the expectations of $14.67 billion projected by LSEG. Despite the challenges, net profit rose 15% year-over-year to $1.27 billion. Adjusted earnings were $1.50 per share, slightly below LSEG's forecast of $1.52. For the fourth quarter, the Atlanta-based company expects revenue growth of 2% to 4%, with the forecast accounting for a one-point revenue decline due to lower demand before and after the presidential elections on November 5. Delta Airlines now targets CrowdStrike and Microsoft for compensation claims. Delta has hired prominent attorney David Boies to pursue potential compensations for the significant disruptions to Microsoft systems. The impact on the airlines was considerable, with Delta being particularly affected, having to cancel nearly 7,000 flights, resulting in over 176,000 refund or reimbursement claims. CEO Ed Bastian reiterated that Delta, despite the summer challenges, is on track to complete one of the most profitable fourth quarters, supported by optimized pricing and strong holiday bookings.