Delta takes off

Delta Air Lines has arrived, and brought a new earnings season along with it.

The company kicked things off in a big way: Not only did the airline beat top- and bottom-line earnings expectations, but its Q3 profit rose 11% year over year. Delta also projects adjusted earnings per share will land between $1.60 and $1.90 per share in Q4, above the $1.65 analysts were expecting, while full-year EPS should hit $6, higher than Wall Street forecasts of $5.80.

Delta credited increased travel demand for the boost, especially from premium and corporate customers: Delta’s Q3 corporate sales jumped 8%, while premium revenue increased 9%. In fact, the company thinks premium revenue will outpace sales from coach cabin seats next year.

Shares of Delta rose 4.23% today.

Is aviation out of the woods?

Delta’s enjoying a nice tailwind during a year of serious turbulence.

The airline originally issued full-year guidance of $7.35 late last year, but withdrew that outlook after President Trump announced a slew of tariffs that rocked the economy. It was one of the first companies to pull guidance, setting the stage for a domino effect of withdrawn forecasts across the market as companies struggled to keep up with the moving tariff target.

Today, management seems confident that it can better anticipate what lies ahead, while investors could interpret Delta’s solid earnings as a bellwether of good things to come for the rest of the airlines sector.

But maybe investors are celebrating a little too soon, given a major headwind for the industry just arrived: The government shutdown is adding more pressure to the already-fragile air travel ecosystem. Air traffic controllers and TSA screeners still have to work during the shutdown, but they aren’t getting paid until it ends. That’s why air traffic controllers are beginning to call in sick to work, leading to staffing shortages and subsequent delays at airports nationwide.

Air travel is a tight-margin business, so airlines don’t leave much time between flights—meaning that one delay or cancellation can start a chain reaction that throws off an entire schedule.

Delta had a great third quarter, but the longer the shutdown lasts, the tougher it’ll be to make up for lost flights this quarter.—LB