Delta Air Lines CEO Edward Bastian told CNBC on Thursday that better-than-expected third-quarter earnings were "really strong," despite headwinds from a major technology outage in August and what he described as "the weakest pricing environment" in recent memory.
In an interview on "Squawk Box," Bastian also said he wasn't ready to call the bottom in pricing. "We've been looking for the bottom for some time." The key metric of revenue per available seat mile fell 6.8 percent in the quarter from a year earlier.
When oil plummeted to $25 per barrel, there was a lot of added capacity "in excess of demand" and airfares plunged, he explained. "At a $50 price point, [that] will allow us to price our product, as an industry, in a more healthy way."
West Texas Intermediate crude, the American oil benchmark, was trading at $49.36 per barrel Thursday.
Earlier Thursday, Delta reported adjusted earnings of $1.70 per share for its quarter ending in September — beating estimates by 5 cents but about 2.3 percent below per-share profit in the year-earlier period.
Operating revenue dropped 5.6 percent to about $10.5 billion, which fell short of expectations. About $100 million of that revenue decline was due to the August computer system outage that led to the cancellation of 2,300 flights over a three-day period.
"It was the redundancy that was the issue, and when we didn't have the proper redundancies in place, which we now do have in place and we tested them and we know they're in place, it took us a long time to recover," said Bastian, who became chief executive in May.
Looking ahead to the fourth quarter, Delta said in its earnings statement that it "expects a slight decline in margins year-over-year, as savings from lower fuel prices and productivity initiatives will be fully offset by declines in unit revenues."
"The challenges certainly [are] the capacity environment and growth in excess of demand," Bastian told CNBC. "We're going to be reducing our growth rate to 1 percent in the fourth quarter and keeping that throughout 2017."
The projections for the December quarter don't include any estimates for the potential contract deal with the pilots. "We're right now in the midst of an evaluation by the pilots. It's a tentative agreement. It's not actually a ratified agreement," he said.
On Tuesday, Delta announced that nonexecutive chairman Richard Anderson was retiring. Frank Blake — former chairman and CEO of The Home Depot and lead Delta director since May — succeeds Anderson.