Delta Air Lines reported a record revenue in the second quarter this week but the investors were not particularly impressed as the biggest U.S. airline disappointed on profit and summer forecasts.
Delta had a revenue of $16.7 billion in Q2 but only a profit of $1.3 billion, which represents around a 30% decline compared to the same period last year. Its adjusted revenue of $15.4 billion came below the $15.45 billion expected by analysts. The airliner’s $2.36 in earnings per share was in line with analysts’ estimates.
Additionally, Delta has a weak forecast for the third quarter. It expects its sales to jump by 4%, while analysts expect a 5.8% increase.
CEO Ed Bastian says that the ticket discounts are to blame for underwhelming results and projections.
“The second quarter was a really strong performance,” Bastian said. “What you see happening is the impact in the domestic marketplace to the lower fare discounting that’s been going on this quarter.”
Delta’s struggles are taken as a sign of weakness in the industry, and there is a belief that other airliners will experience similar issues.
“The reality here though is that Delta’s financials remain among the best in the industry …, which speaks to just how bad the low end of the US domestic market is today,” said Melius Research airline analyst Conor Cunningham via CNBC.