Delta wants to keep as much control over fares as it can. Its answer? Limit the growth of capacity. We'll see in the next couple of weeks to what degree its competitors follow suit.
Delta Air Lines Inc.’s third-quarter profit exceeded analyst expectations as the carrier’s efforts to trim growth in available seats gave it more control over fares.
Adjusted earnings were $1.70 a share, surpassing the $1.65 average of 15 estimates compiled by Bloomberg. Sales fell to $10.5 billion, in line with estimates. Unit revenue, a key industry measurement, may fall by 3 percent to 5 percent in the current quarter, a smaller decline than the 6.8 percent drop in the third quarter, the carrier said in a statement Thursday.
Delta has been paring growth as a glut of seating capacity drags down fares across the U.S. airline industry. The Atlanta-based carrier will continue with a modest capacity expansion next year, Chief Executive Officer Ed Bastian said.
“With our focus on building a more sustainable and durable business, we will be taking a cautious approach to 2017 by keeping our capacity in line with the December quarter’s 1 percent growth level,” Bastian said in the statement.
©2016 Bloomberg L.P.
This article was written by Michael Sasso from Bloomberg and was legally licensed through the NewsCred publisher network.
Photo credit: Business travelers in Delta Economy Comfort in a Boeing 757-200ER (75S). The carrier just reported its third quarter earnings. Delta Air Lines