Tess Torelli January 11, 2018

Delta said its fuel expense rose $350 million in the third quarter and that it paid an average of $1.93 a gallon. It expects to pay around $2.05 to $2.10 a gallon in the first three months of this year.

“I think the biggest thing we have going in our favor in 2018 is a strong economy with a lot of optimism,” Delta CEO Ed Bastian said on an earnings call Thursday. He admitted, however, that fuel “is a little bit of a wild card.”

The U.S. economy grew 3.2 percent in the third quarter, the biggest increase for the July through September period in two years, according to the U.S. Commerce Department.

Corporate travel revenue last quarter grew at the fastest clip since 2014, the airline said, adding that it will likely continue this year.

Corporate travel will rise more than 6 percent this year, the highest growth rate since 2011, Deloitte recently estimated.

Earlier this week, Bank of America Merrill Lynch said the new tax legislation would boost business-travel spending this year and that would help boost shares of Delta, United and American, which are heavily reliant on corporate travel revenue. Delta said the tax law would likely spur more corporate travel spending.

But investors will task Delta to keep a lid on increasing costs, which the airline expects to rise 2 to 4 percent this quarter, not including fuel. Delta said it would try to trim costs for hotels, transportation and fleet management.

Higher costs will hurt its ability to grow profits in the first three months of the year, it said, forecasting earnings of between 60 and 80 cents a share, below the 83 cents a share forecast by analysts polled by Thomson Reuters.

Delta has been restrained when it comes to growing capacity and expects to upgrade to larger aircraft to meet some of the increasing demand. It expects to grow capacity around 3 percent this quarter, while increasing revenue per each seat it flies — a key industry metric — to a gain of 2.5 to 4.5 percent. Too much growth can lead to depressed fares, which tends to spook investors.

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