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Delta Air Lines, Inc. (NYSE:DAL) shares are trading higher by 1.41% to $43.55 during Thursday’s session. The stock was initially down then reversed in reaction to American Airlines Group Inc’s (NASDAQ:AAL) and Southwest Airlines Co’s financial results.
Delta is additionally facing financial setbacks due to a recent system failure causing thousands of flight cancellations and a federal investigation. Citigroup cut its third-quarter earnings estimate for Delta by 60 cents per share to $1.37. Analysts estimate a $350 million impact on operating profit and potential fines.
When major airlines like American Airlines and Southwest Airlines report worse-than-expected results, it signals broader industry challenges. Investors may assume that Delta, being part of the same industry, faces similar issues, such as increased operating costs, capacity management struggles, and demand fluctuations.
Southwest Airlines reported a significant 13% increase in operating expenses, driven by market-driven rate inflation in salaries, wages, benefits, and higher maintenance expenses. These cost pressures are likely affecting all airlines, including Delta, which may concern investors about Delta’s cost management and profitability.
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