Delta Q4 earnings in line with estimates, sees 'meaningful' rebound amid Omicron

Delta Air Lines (DAL) on Thursday reported fourth quarter earnings that came in line with Wall Street estimates, as travelers returned to the skies over the holidays despite the impact on staffing from the Omicron variant of COVID-19.

Here are the main results from the Q4 report compared to consensus estimates compiled by Bloomberg:

• Adjusted pre tax income: $170M vs $143M expected

• Adjusted earnings per share: 22 cents vs 22 cents expected

• GAAP earnings per share: ($.64) vs $.23 expected

• Revenue: $8.4 billion vs $8.45 billion

Revenue in the fourth quarter was 74% recovered compared to pre-pandemic levels, and up 8 points from Q3 2021. For the full year, Delta reported an adjusted pre-tax loss of $3.4 billion on adjusted operating revenue of $26.7 billion.

Looking ahead, Delta CEO Ed Bastian told Yahoo Finance that the carrier expects "a meaningful profit number for the full year in 2022.”

Bastian pointed out that the rapidly spreading Omicron significantly impacted staffing levels and disrupted travel across the industry in December, but said Delta has stabilized its operations and returned to pre-holiday performance.

“Only about 1% of our flights are being impacted due to Omicron,” Bastian said, pointing out the number of cancelations keeps falling. “It's only about 20 flights a day as compared to the 4000 we operate.”

But the pandemic will continue to take a toll on Delta during the first two months of this year. The airline is guiding to a pre-tax loss in January and February with a return to profitability in March.

“Even with a challenging start to the year, we remain positioned to generate a healthy profit in the June, September and December quarters as well as for the full year,” the company said in a statement to Yahoo Finance.

Employees to get a profit sharing check

Delta’s pandemic recovery allowed the airline to book a pre tax profit of $400M for the second half of 2021; as a result Delta announced profit sharing for the airlines employees.

"We're going to pay out on Valentine's Day $100 million to our people, and it will be a flat check of $1,250 per person," said Bastian, praising the airline's workforce. "And we can't wait to get that for them to thank them for the job they do."

Delta predicts that by 2024, its financial condition will exceed 2019's financial performance — although Bastian says it might come sooner. Much depends on travel abroad, where demand remains weak, he explained.

"International travel is going to be a much longer return journey than domestic, for example, business travel to Asia, for example, it's going to take probably until 2024," Bastian said.

Domestic business travel is also taking longer to return to normal, according to Bastian, who said it was delayed by the Omicron wave that's pushed back return-to-office plans nationwide.

“Our survey of our big corporate customers, only about 60% of their offices are open at this point," the CEO told Yahoo Finance. "So we need those offices to get reopened so people have a place to travel and congregate, meet and continue to grow their businesses.”

Bastian said it is possible that 10% to 20% of the business travel market may fail to return in the way it existed in 2019.

Currently, Transportation Security Administration (TSA) data show Americans flying close to pre-pandemic levels. The daily number of passengers passing through TSA runs about 400,000 less than it did in 2019, which accounts for the loss of business travelers. It is one of the reasons Bastian is predicting an increase in flyers this spring.

"I think the pandemic is going to spark up rapid growth in travel because people have not been able to go where they need to go for several years now," he said. "And I think the demand once the virus is in a safe spot which we expect it will be hopefully starting this spring, we're going to see a surge of travel."

Adam Shapiro is co-anchor of Yahoo Finance Live. Follow him on Twitter @Ajshaps

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