Delta Air Lines Inc on Thursday reported a 13.5% drop in third-quarter profit, noting that the economic effects of the Hollywood writers strike and auto industry labor disputes had hurt business travel, while rising oil prices depressed demand for leisure tickets.
Delta said its third-quarter profit was $449 million, down from $518 million a year earlier. The airline also said that fourth-quarter revenue would be flat due to weak demand and excess capacity in the airline industry.
Delta said the weak economy had reduced business traveler demand and competitive pressures were keeping fare prices low. The airline said it had also seen “softness” in yield – which measures the average price paid per mile by a passenger – in the domestic market, and that yields in its international markets were being pressured due to higher fuel costs.
However, Delta said it had been able to offset the headwinds in the third quarter by cutting costs, driving better cost performance and improving its balance sheet. The airline said it had made “tangible progress” in its effort to reduce its legacy debt and capital leases.
Looking ahead, Delta said it expected to achieve additional savings in the fourth quarter to offset continued weak revenue. It also said it was continuing to review its network structure to reduce capacity and better match supply with demand. The airline said it would continue to pursue initiatives that increase revenues and profitability including driving cost reductions, product enhancements and improved customer service.