Delta Air Lines warns of revenue hit as election spurs travelers to stay home

Core Viewpoint - Delta Air Lines anticipates a decline in fourth-quarter revenue due to consumer behavior surrounding the upcoming US presidential election, although it expects the quarter to be one of the most profitable in its history due to strong holiday travel bookings and improved pricing power [1][3]. Group 1: Revenue and Profit Expectations - Delta expects an adjusted profit of $1.60 to $1.85 per share for the quarter ending in December, slightly above analysts' expectations of $1.70 per share [3]. - Overall revenue is projected to increase by 2% to 4% year-over-year, supported by a 3% to 4% rise in capacity [4]. Group 2: Impact of US Presidential Election - The uncertainty surrounding the US presidential election is expected to negatively impact travel demand for approximately two weeks around November 5, with a recovery in bookings anticipated afterward [3]. - Historically, domestic travel demand has shown a decline in the weeks surrounding elections, with revenue trends expected to be significantly better in October and December compared to November [3]. Group 3: Capacity and Pricing Power - Measures taken by US airlines to moderate capacity have enhanced pricing power across all regions, a trend expected to continue into the December quarter [6]. - Domestic seat growth has slowed to 1.5% in October and November from 5.5% in July, indicating a strategic reduction in capacity to improve profitability [6]. Group 4: Market Performance and Challenges - The NYSE Arca Airline index has risen by 25% since early August, outperforming the S&P 500 index, which increased by 8%, with Delta's shares gaining over 30% [8]. - Delta reported an adjusted profit of $1.50 per share for the September quarter, slightly below the $1.52 estimated by analysts, primarily due to disruptions from a global cyber outage that led to approximately 7,000 flight cancellations [8].