By Rajesh Kumar Singh
CHICAGO (Reuters) -Delta Air Lines on Friday scaled down its profit outlook for the current year, citing higher costs, supply chain issues and macroeconomic uncertainties.
The company's shares fell more than 8% shortly after midday, dragging down the broader the NYSE Arca Airline index.
The Atlanta-based carrier now expects an adjusted per-share profit of $6 to $7 this year, compared with its previous target of more than $7 first outlined in 2021.
The 2024 estimate compares with analysts' expectations of $6.50 according to LSEG data.
The company said it had not anticipated the run-up in wage rates and general inflation when it first issued the profit outlook. More importantly, the full extent of supply chain constraints were unknown at that time, it added.
In an interview, Delta CEO Ed Bastian said the company still had an internal earnings goal of more than $7 a share, but it was offering an outlook to the market that it had «a good deal of confidence in.»
«With the amount of uncertainty that continues to exist within the supply chain, in the maintenance arena, within the economic outlook, we wanted to be prudent,» Bastian told Reuters. «But that doesn't mean we can't out-produce it.»
Shortages of parts and labor continue to hobble aerospace supply chains, impacting aircraft deliveries and forcing airlines fly older planes longer than expected. That has driven up maintenance and repair costs.
«We expect maintenance cost headwinds and labor wage inflation will drive higher unit costs for most carriers in 2024,» analysts at Barclays said in a note.
Delta's aircraft maintenance costs were up 23% last year from the previous year. The company told investors that maintenance costs were expected to be up
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