Delta Air Lines’ third-quarter earnings fell by 26%, largely due to a global technology outage in July that led to thousands of flight cancellations.
The airline reported a net income of $971 million, down from $1.31 billion during the same period last year. Although revenue rose slightly, the company’s rising operational costs, including labor and airport fees, outpaced the gains, leading to the profit decline.
The global tech outage, which originated from a faulty software update deployed by cybersecurity firm CrowdStrike, disrupted thousands of businesses worldwide, with Delta being one of the hardest-hit. The airline canceled over 7,000 flights over five days, resulting in an estimated $380 million in losses, including $170 million in customer reimbursements and crew-related expenses.
Despite these setbacks, Delta remains optimistic about its recovery. CEO Ed Bastian emphasized that bookings for the upcoming holiday season, particularly Thanksgiving and Christmas, remain strong. However, he also noted a potential temporary slowdown in travel demand as Americans await the outcome of the November elections.
Looking ahead, Delta expects a return to year-over-year earnings growth in the current quarter. The airline anticipates benefiting from reduced competition from lower-cost carriers and plans to seek compensation for the financial losses caused by the tech outage. Delta also saved approximately $50 million on fuel costs due to the canceled flights.
Shares of Delta fell by nearly 6% in premarket trading following the earnings report, pulling down stocks of other major airlines as well. However, Delta’s stock recovered some ground later in the day. The airline’s third-quarter earnings per share came in at $1.50, slightly below analysts’ expectations, and it revised its fourth-quarter earnings forecast to $1.60 to $1.85 per share, below earlier projections.
In light of the challenges, Delta has filed legal action against CrowdStrike and Microsoft, seeking damages for the outage, which impacted over 1.3 million customers. While the airline has faced disruptions this year, including the recent threat of Hurricane Milton, its stock has risen 27% year-to-date, outperforming the broader market.
The Associated Press, Business Insider, and Bloomberg contributed to this report.
