Delta Air Lines Inc. posted a quarterly profit as travel demand began to recover in recent weeks despite the spread of a more contagious Covid-19 variant, though the company said it faces pressure from rising fuel prices.

Delta on Wednesday reported a third-quarter profit of $1.2 billion. It was the airline’s second quarterly profit since the pandemic began and the first time that it earned money without including government aid. Excluding that and other items, Delta posted an adjusted profit of $194 million.

Travel...

Delta Air Lines Inc. posted a quarterly profit as travel demand began to recover in recent weeks despite the spread of a more contagious Covid-19 variant, though the company said it faces pressure from rising fuel prices.

Delta on Wednesday reported a third-quarter profit of $1.2 billion. It was the airline’s second quarterly profit since the pandemic began and the first time that it earned money without including government aid. Excluding that and other items, Delta posted an adjusted profit of $194 million.

Travel demand roared back this summer before the spread of the Delta variant threatened to bring airlines’ recovery to an abrupt halt. While “the variant”—as Delta Air Lines refers to it—caused bookings to slow and revenue to dip, the impact was modest and temporary, Chief Executive Officer Ed Bastian said in an interview.

“We didn’t get derailed by the variant,” he said.

While airlines tempered their outlooks and cut back on flying as the variant caused people to hold off on making travel plans and cancel existing trips, carriers have said recently that demand has stabilized or started to return. American Airlines Group Inc. said Tuesday that its third-quarter revenue will likely be 25% below 2019 levels, “on the better end” of what the company had previously anticipated.

Mr. Bastian said bookings have been growing in the past five weeks and corporate travel bookings have reached a fresh pandemic high. Domestic business volumes are close to 50% recovered as of last week, he said, albeit not as strong as the airline had been hoping for before companies started to delay returning to offices.

Delta started the year with business levels languishing at a quarter of 2019 levels. By the end of the year, the airline expects to be bringing in 75% of what it did before the pandemic decimated travel.

“While choppy, there’s a clear underlying momentum in our company that gives us optimism as we go into 2022,” Mr. Bastian said during a conference call.

Demand for holiday travel appears strong and the reopening of international travel will add to demand in coming months, he said. The U.S. has said it plans to remove travel bans that barred people from several countries from entering the U.S., and instead will require that non-Americans arriving from abroad show proof of vaccination.

Delta’s bookings originating in Europe are six times higher in November and December than they were before the eased restrictions were announced, Delta President Glen Hauenstein said Wednesday.

Still, airlines will face new challenges keeping a lid on their costs, with fuel prices and other costs set to rise, analysts say. Delta said it expects higher fuel prices to undercut its profit in the fourth quarter. The airline expects jet-fuel prices between $2.25 and $2.40 a gallon in the quarter, up from $1.94 in the third quarter.

SHARE YOUR THOUGHTS

Have you taken a flight or booked one since pandemic restrictions have eased? Join the conversation below.

In the past, airlines have been able to pass on higher fuel costs to customers by increasing fares, but there is generally a lag and it is unclear if customers will be more price sensitive as they return to travel.

“In the short term, that’s our biggest inflationary pressure,” Mr. Bastian said.

Delta shares fell about 5% in midday trade.

Delta expects corporate travel, a mainstay of the airline’s business, to climb to 80% to 100% of 2019 levels by the end of next year. While Mr. Bastian said he expects some erosion of demand coming out of the pandemic, hybrid work and video conferencing could present new opportunities for travel, he said.

Airlines have had some operational stumbles as travel has rebounded and have raced to hire more workers. While Delta delayed and canceled fewer flights than major rivals over the summer, its customers often encountered hourslong waits for customer service over the phone, something the airline has been working to fix.

Mr. Bastian said Delta has made progress, but it will be another two to three months before the issue is resolved. Delta has so far hired more than 8,000 workers during the year—and the airline isn’t having trouble finding new staff and hasn’t had to raise entry-level pay, he said.

Earlier

President Biden unveiled a six-pronged strategy to combat the Delta variant of Covid-19 that ramps up vaccine requirements for employers with 100 or more workers, those in the medical field and federal workers. Photo: Brendan Smialowski/AFP/Getty Images The Wall Street Journal Interactive Edition

As Southwest Airlines Co. ’s operation stabilizes after days of mass cancellations that the airline’s executives linked to staffing shortfalls, Delta executives said they are mindful of not spooling the airline up again too quickly and sacrificing reliability.

The airline cannot grow much bigger “without risking the operational performance issues like you’ve seen at some of our other carriers,” Mr. Hauenstein said. “We want to stay where we’re confident that we can actually fly the schedules that we put out there.”

Southwest has previously said it plans to work to increase its staffing margin and will consider further schedule cuts in order to prevent repeats of this weekend’s cancellations.

While other major carriers have announced they will require employees to be vaccinated against Covid-19 to comply with new rules for federal contractors—including airlines—Delta has held off. Mr. Bastian said Delta is also a contractor, bringing in hundreds of millions of dollars a year in revenue from government work, and would comply with federal requirements. But the airline believes its policies are working to persuade people to get shots.

Delta has started requiring unvaccinated employees to undergo regular testing, and next month it will start charging them an extra $200 a month for health insurance. Since that plan was announced, Delta’s vaccination rate has climbed from about 75% of employees to 90%, Mr. Bastian said. The airline expects to have 95% of its employees vaccinated by November. Factoring in people who will be granted exemptions for religious or medical reasons, very few holdouts will likely remain, he said.

As a result, Mr. Bastian said he isn’t concerned about any disruptions over the holiday season.

Unions that represent pilots at American and Southwest have said there could be problems over the busy holiday season if pilots who object to vaccination are terminated, leading to staffing shortages.

“We’re going to be well above the threshold for any disruptive activities,” Mr. Bastian said.

Delta reported an adjusted profit of 30 cents a share excluding the government aid, beating the 15 cents a share profit analysts expected, according to FactSet.

Write to Alison Sider at alison.sider@wsj.com