Delta Air Lines expects to report a profit this quarter, even with climbing fuel costs, thanks to strong demand and higher fares. March 2022 marked the strongest-ever month in company history for new bookings.
Delta Forecasts Return To Quarterly Profit, Pledges Smooth Summer Of Travel
Compared to 2019, Delta’s capacity this quarter will be at 84%. Fuel prices will be 6% higher than 2019, even though capacity is down over 16% (jet fuel prices have actually doubled since last year). Even so, Delta expects revenue to approach 97% of 2019 levels, a powerful indicator of current demand and of rising fares.
Why so much demand during a period of rapid inflation? Delta CEO Ed Bastian explained on CNBC’s Squawk Box:
“People have been cooped up for the last two years. They’re done investing in their homes and their garden and want to go see someone else’s garden for a change.”
Across the industry, domestic fares in the U.S. rose last month 20% compared to 2019 levels. Even more significantly, Delta reported the highest demand in its entire history (in terms of volume) in March.
In another area of strength, Delta reported that its revenue from American Express rose 25% over the same period in 2019, totaling $1.2 billion. It also dramatically added revenue from its oil refinery, reporting $1.2 billion versus only $48 million during the same period in 2019.
Bastian added:
“As our brand preference and demand momentum grow, we are successfully recapturing higher fuel prices, driving our outlook for a 12 to 14 percent adjusted operating margin and strong free cash flow in the June quarter,”
Translation: things are looking up for Delta, even with higher fuel prices. Bastian also assured passengers that the airline is fully staffed and ready to avoid meltdowns this summer.
CONCLUSION
Delta Air Lines is back in the black, attributing increased revenue to pent-up travel demand that has more than been able to offset higher fuel prices and other rising costs.
Next: An outlandish claim from the Delta CEO
image: Delta
Every time I fly through HNL which has been monthly these days, I often ask myself how much money DL has left on the table by not increasing their frequencies to the Aloha State while UA was flying their often packed 77Ws and AA was flying in their 772s and 789s. Sadly it even seems Southwest was doing much more business and frequency of flights vs DL. I hope they return their flights between Japan and HNL soon as well – even if it’s only a gradual return.
Given the current fares I’m encountering during searches these days I should say they’ll crush earnings! Routinely fares are 3x-5x from usual, at least from my local airport. It’s ridiculous. Obviously someone is paying it but I can’t imagine whom.
I understand they got clobbered in ’20 and ’21 but they seem to be trying to recoup all that revenue in 90 days. Sorry Delta, I’ll wait it out.
“Bastian also assured passengers that the airline is fully staffed and ready to avoid meltdowns this summer”
Didn’t Scott Kirby say that last fall?