Delta posts a profit but warns Omicron will mean a loss this quarter
By Chris Isidore, CNN Business
A strong holiday travel season helped Delta Air Lines to a better-than-forecast profit in the last three months of 2021. But it expects to lose money again in the current quarter as Covid infections surge.
Still, the airline offered a hopeful message, saying it expects the impact of Omicron on its operations will be over within the next 60 days. That should allowing Delta to return to profitability by March and to continue to make money throughout the summer travel season.
“The recent rise in Covid cases associated with the Omicron variant is expected to impact the pace of demand recovery early in the quarter, with recovery momentum resuming from President’s Day weekend forward,” said Glen Hauenstein, Delta’s president.
Delta, which was the only major airline to report a profit in the third quarter, earned $143 million excluding special items, in the fourth quarter. That was better than the $85 million forecast by analysts.
Even with the profitable second half, the company posted a full-year loss of $408 million, excluding special items, because of deep first-half losses. But Delta announced Thursday it will pay employees a total of $108 million in profit-sharing bonuses, based on the earnings in the second half.
Delta, whose workforce is primarily nonunion, other than its pilots, has one of the nation’s most generous profit-sharing plans. In 2019, before the pandemic, it paid a record $1.6 billion in profit sharing, roughly the equivalent of two months of pay for each employee.
“As always, our people drove this success, which is why we were happy to announce this morning a special profit-sharing payment for all eligible employees,” said CEO Ed Bastian.
Bastian said that the Omicron surge came at the worst possible time for the airline industry, because travel during the holiday period was by far the highest level seen since the start of the pandemic. Delta and virtually all other airlines had to cancel thousands of flights because of staffing shortages caused by employees testing positive for Covid and not being able to work.
“We’re doing much much better than we were through the early part of the holiday period,” Bastian said in an interview Thursday on CNBC. He said about 8,000 Delta employees were infected by the virus, or nearly 10% of its staff.
He said case counts are coming way down in the last week and that so have flight cancellations, which have averaged 1% of scheduled flights over the last seven days compared to 5% or more during the holiday period. On Wednesday there were only two flights canceled out of 2,500 scheduled flights due to staffing shortages caused by Omicron.
“We believe the worst is behind us,” he said.
Three months ago, the company had warned it expected a fourth-quarter loss because of rising fuel prices. But fuel prices rose less than Delta had feared, and holiday travel was stronger than it had expected.
Shares of Delta were up 2% in premarket trading on the report.
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