Atlanta, GA-based airline heavyweight Delta Air Lines (NYSE: DAL) faces multiple headwinds ranging from the current overcapacity in the airline market, technology outage and high costs. Due to the headwinds, earnings estimates for not only the remaining quarters of 2024 but also for the current year are on the decline, signaling a bearish outlook for the airline. The Zacks Consensus Estimate for third-quarter and full-year 2024 earnings per share indicates a decline of 26.1% and 5% from the respective 2023 figures.
Image Source: Zacks Investment Research
Let's delve deeper.
Overcapacity Likely to Hit Q3 Results of DAL
The airline market in the United States is currently characterized by overcapacity. This is expected to hurt the performance of airlines, including DAL, despite buoyant air travel demand this summer.
Carriers have been compelled to lower airfares despite an escalation in costs, thereby hurting profits amid the summer travel buoyancy. Discount carriers have added too many seats that they are now attempting to fill by lowering fares and compelling airline majors like DAL to follow suit to stay competitive. This has hurt pricing power, which is expected to dent third-quarter results.
DAL's Revenue Loss Due to Global Outage
The global technology outage on Jul 19, caused by security software provider CrowdStrike's software update hit Delta the hardest among U.S. airlines. Following the faulty software update, DAL's operations were crippled more than others due to its dependence on Microsoft systems for ...
