Delta Air Lines, Inc. ( DAL ) shares are trading lower premarket after the company reported mixed third-quarter results.

Delta reported third-quarter operating revenue growth of 1% year-over-year to $15.677 billion, beating the consensus of $14.674 billion. Adjusted operating revenue was $14.594 billion (almost flat YoY).

Adjusted average fuel price of $2.53 per gallon, down 9% from last year’s quarter. Adjusted EPS was $1.50 (-26% YoY), missing the consensus of $1.52.

Total passenger revenue was almost flat year over year at $13.107 billion; cargo revenue grew 27% year over year to $196 million, and Other revenue was $2.374 billion (+7% year over year).

Delta recorded an adjusted operating income of $1.373 billion, compared to $1.963 billion YoY, with an adjusted operating margin of 9.4%, down ~410 bps.

Adjusted operating expenses increased by 5% YoY to $13.221 billion, and non-fuel costs were $10.13 billion (+10% Y/Y) for the quarter.

Delta reported a $380 million revenue hit from the CrowdStrike-caused outage in the September quarter, mainly from refunds and compensation. Non-fuel expenses rose by $170 million, while fuel costs decreased by $50 million due to 7,000 canceled flights.

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Delta generated an adjusted operating cash flow of $1.276 billion (+13% YoY). Adjusted net debt at quarter-end decreased ~8% YoY to $18.682 billion. Adjusted debt to EBITDAR of 2.9x, down from 3.0x at the end of 2023.

“During the quarter, we achieved a meaningful milestone with our balance sheet receiving an upgrade to investment grade from Fitch. Delta is now investment-grade rated at Moody’s and Fitch, and one notch away at S&P with a positive outlook,” stated Dan Janki, Delta’s chief financial officer.

Total revenue per available seat mile decreased by 3% year over year. The passenger load factor was 87% vs. 88% in the third quarter of 2023.

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DAL’s Air Traffic Liability ended the quarter at $8.3 billion, up from $7.04 billion compared to the end of 2023.

“With an improving industry backdrop and strong demand for travel on Delta, we are positioned to finish the year strong. We expect our December quarter pre-tax profit to grow 30 percent over last year to $1.4 billion, which would mark one of the most profitable fourth quarters in our history,” commented Ed Bastian, Delta’s chief executive officer.

“For the December quarter, we expect the improved trends to continue and bookings for the holiday period are strong. We anticipate a 1 point impact to total unit revenue from reduced travel demand around the election,” mentioned Glen Hauenstein, Delta’s president.

Fourth-quarter 2024 Outlook: On a non-GAAP basis, Delta expects revenue growth of 2% – 4%, EPS of $1.60 – $1.85 versus $1.69 consensus, and an operating margin of 11%-13%.

Price Action: DAL shares are trading lower by 3.24% at $49.33 premarket at the last check Thursday.

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