Delta Air lines posts first quarterly profit since the pandemic

Yahoo Finance's Brian Sozzi and Julie Hyman discuss the third quarter earnings from Delta Air Lines. Read more here: Delta swings to profit in Q3

Video Transcript

JULIE HYMAN: Let's move on to one other company that was out this morning, and that is Delta Airlines, its first quarterly profit, if you exclude the effect of federal aid, at a major US airline since the start of the pandemic. You can see the numbers beat estimates. Of course, rising jet fuel prices are going to be a challenging issue for the company.

And the shares are trading a little bit a little bit lower here this morning. They came out with the forecast as well. Fourth quarter revenue is going to rise in the low 70% range compared with 2019, and cost for each seat flown a mile excluding fuel are going to go up as much as 8% from 2019. So that's interesting as well, that costs are rising even excluding fuel there, Brian.

BRIAN SOZZI: Yeah, what bothered me here-- and we talked a little bit about this in the newsletter to kick off the week on Monday, Julie, and it's something I think you're seeing with JP Morgan come out with better than expected results, the stock selling off. We're seeing the same thing here with Delta. Delta stock rallied about 10% coming into this report.

I think the market was positioned just to hear a better commentary about the back half of the year or the fourth quarter, in this case. That didn't appear to happen, and really two red flags for me-- Delta calling out that higher oil prices may mean that it's not profitable in the fourth quarter. Big red flag.

And the other red flag is them noting corporate demand or corporate travelers stabilized, but it did weaken towards the latter part of the quarter here. And if out there trading these return to normal type of companies-- a Marriott, a Hilton, the hotel chains-- you're concerned about the commentary from Delta this morning. And if you're just out there trading the market and you remain upbeat, you should also be concerned about what Delta had told you this morning. It's another company warning that higher energy prices are going to really impact its bottom line to an extent that many strategists and analysts probably haven't really factored in yet.

JULIE HYMAN: Yeah, well, we are going to get some more perspective on those Delta earnings from Ed Bastian, the CEO. Our Adam Shapiro had the chance to speak to him. And we'll be getting those comments just a little bit later in the show. So looking forward to hearing what he has to say about all of that.