Delta Air Lines Reports Q3 2024 Earnings
Delta Air Lines Inc. (NYSE:) recently reported its third-quarter 2024 earnings, and the results initially led to a drop in its share price due to missing both top and bottom line estimates. Let’s take a closer look at the key highlights and why investors should still consider Delta Air Lines stock as a potential opportunity:
1) CrowdStrike Software Outage Impact
One of the main reasons for Delta Air Lines missing its Q3 2024 earnings estimates was a one-time software outage caused by CrowdStrike Holdings Inc. (NASDAQ:). This outage resulted in 7,000 flight cancellations, leading to a revenue shortfall of $380 million and a decrease in bottom line EPS by 45 cents. However, it’s important to note that this was a unique event and not indicative of the company’s overall performance.
Key Points:
- Demand cooling caused fare prices to dip, contributing to a 3.6% YoY drop in total operating revenue per seat mile (TRASM).
- Removing the effects of the CrowdStrike outage would have resulted in a strong EPS beat for Delta Air Lines.
2) Expectations for Record Profits in Q4
Despite the challenges faced in Q3, Delta Air Lines is optimistic about its fourth-quarter outlook. The company anticipates record profits with an operating margin expected to improve from 11% to 13%, up from 9.4% in the previous quarter. Factors such as improved supply, positive domestic and transatlantic unit revenue growth, and a surge in international flights are all contributing to this positive forecast.
Key Points:
- Corporate travel sales grew by 7% YoY, with strong performance in the tech, media, and banking sectors.
- 85% of companies are planning to increase their corporate travel spending in 2025.
3) Technical Analysis and Stock Outlook
From a technical standpoint, Delta Air Lines stock is showing signs of a potential breakout. The formation of a symmetrical triangle pattern suggests a tightening range that could lead to a breakout if the stock surpasses the upper trendline resistance. Additionally, analysts have set a consensus price target of $65.40, indicating potential upside for investors.
Key Points:
- The daily relative strength index (RSI) is gradually rising, indicating positive momentum for the stock.
- Actionable options strategies include using cash-secured puts at Fibonacci pullback support levels for buying opportunities.
Overall, while Delta Air Lines faced challenges in Q3 2024, the company’s outlook for the fourth quarter is promising. Investors should consider the one-time nature of the software outage and the positive trends in corporate travel and profitability when evaluating the potential of Delta Air Lines stock.