Delta forecasts fourth-quarter revenue below estimates, shares fall

Delta Air Lines on Thursday forecast quarterly revenue largely below expectations in anticipation of slower travel spending against the backdrop of the upcoming U.S. presidential election, sending its shares down 6.3% before the bell.

The carrier expects fourth-quarter revenue between $13.9 billion to $14.2 billion, compared to average analysts' estimate of $14.22 billion, according to LSEG data.

The weak forecast sent shares of rivals United Airlines and American Airlines tumbling 3%, while Southwest Airlines slipped 1%.

An excess supply of airline seats in the domestic market during the summer travel season had forced carriers to discount fares to fill their planes, hurting their profits.

Since then U.S. airlines have moderated capacity. Annual domestic seat growth has slowed to 1.5% in October and November from 5.5% in July, according to BofA analysts.

Delta said the steps taken by U.S. airlines to lower capacity improved its pricing power across regions in the third quarter. It expects the trend to continue in the December quarter.

The carrier forecast adjusted profit of $1.60 to $1.85 per share in the quarter through December, whose midpoint was above expectations of $1.70.

"With an improving industry backdrop and strong demand for travel on Delta, we are positioned to finish the year strong," CEO Ed Bastian said.

Delta expects the presidential race, a period when discretionary spending usually slows due to uncertainty, to hurt its fourth-quarter unit revenue by 1 percentage point.

Its overall revenue is estimated to rise 2% to 4% from a year ago due to a 3% to 4% increase in capacity.

Delta reported an adjusted profit of $1.50 per share in the September quarter, lower than the $1.52 estimated by analysts, mainly due to mass flight cancellations following a global cyber outage.

A software update in July by global cybersecurity firm CrowdStrike triggered system problems for Microsoft customers, including many airlines. The disruptions persisted at Delta even as they subsided the next day at other major U.S. airlines.

Delta canceled about 7,000 flights over five days, disrupting the travel plans of 1.3 million customers. The company said on Thursday that the disruptions led to a 45 cents per share hit to its third-quarter profit.