As expected, “Brexit” is continuing to show up in company earnings.
Delta Air Lines topped forecasts for profits, but missed slightly on operating revenues in the second quarter, its earnings statement released on Thursday showed.
The company announced adjusted earnings per share of $1.47 ($1.42 expected according to Bloomberg), on operating revenue of $10.4 billion ($10.5 billion forecast.) Delta shares rose by as much as 2% in pre-market trading.
And in the results, the company announced one of the impacts that Britain’s unexpected vote to leave the European Union last month will have on its operations.
From the release (emphasis added):
With the additional foreign currency pressure from the steep drop in the British pound and the economic uncertainty from Brexit, Delta has decided to reduce 6 points of U.S.-U.K. capacity from its winter schedule. These changes, in combination with other network actions, will reduce system capacity by approximately one point in the December 2016 quarter and the company now expects to grow its system capacity by 1 per cent year over year during this period.
The British pound was the biggest casualty in global currencies after the referendum late in June, suffering its largest drop on record.
As expected, US companies that have significant operations in the UK are expected to continue disclosing the impacts of the plunge.
In 2015, the dollar’s surge in anticipation of higher US interest rates had a wide-ranging impact on multinationals.
It seems the pound will be the FX story of the next few earnings seasons.