"It's really a demand-driven business" said Brian Mulberry, client portfolio manager at Zacks Investment Management. "If there's less demand, then obviously less sales means less profitability."goal of generating profit of over $7 per share next year, with some analysts now calling the target aspirational. That is a reason why the airline's shares are down 10% this month even after it posted stronger-than-expected quarterly earnings.
But that's easier said than done as analysts say a depletion of pandemic savings as well as high interest rates have crimped consumers' tolerance for high fares. "Travel remains a top purchase priority and our core customer base is in a healthy financial position," Delta CEO Ed Bastian said last week.
Rising fuel prices are estimated to inflate Delta's costs by $400 million in the second half of the year. The airline has trimmed its profit outlook for 2023 to a range of $6.00 to $6.25 a share from $6 to $7 per share estimated in July.