Skift Take

While a myriad of issues are set to constrain growth in the airline industry, Delta seems almost immune to those headwinds.

As the airline industry grapples with delayed aircraft orders and rising operating costs, Delta Air Lines has stayed above the fray. 

The carrier not only posted a narrow profit during what’s typically a sluggish quarter for airlines, but travel demand across the board remains strong. 

Travel Demand Is Still Robust, But Don’t Expect an Olympics Boost

Delta president Glen Hauenstein said in a call with analysts Wednesday revenues for premium seating were up 10% compared to the same time last year, and corporate travel, which has struggled to bounce back post-pandemic, is now making a comeback.

Hauenstein said based on a survey the carrier conducted, 90% of companies that responded intend to increase travel in the second-quarter, setting Delta up to deliver record corporate revenues in the latter half of the year. 

The Delta president added that corporate travel sales were up 14% in the first-quarter, with the technology, customer service and financial services industries leading the increase. 

Delta also saw record revenues for domestic travel, which was up 5%, during the first three months of 2024. International travel revenues were up 12% in the first-quarter, showing the consumer appetite for international travel hasn’t waned. However, Hauenstein said transatlantic growth was “muted” due to the carrier’s investments in rebuilding its presence in Latin America and the Pacific.  

And while Delta expects to see strong transatlantic demand in the summer, it isn’t betting on a boost from the Paris Olympics. Hauenstein said the carrier anticipates business travel in the Paris region will decrease closer to the Olympics. 

“Well, generally, the Olympics are not good for airline revenues,” Hauenstein said on the call. “And this year, I think, is no exception to that.”

Delta-American Express Credit Card Sign-Ups Spike

Delta’s co-branded credit card with American Express has been a major source of revenue for the airline. The credit card is so important to Delta’s operation that CEO Ed Bastian has previously told investors that around 1% of the U.S. economy is spent on Delta’s credit card

AmEx recently rolled out new benefits to the co-branded card, but is also charging a higher annual fee. Some of these benefits include more credits for flights, restaurants and rideshare apps after spending a certain amount. Users of higher-end credit cards also receive $2,500 in “medallion qualifying dollars” to get them closer to reaching elite status with Delta SkyMiles. 

Those higher annual fees haven’t deterred any new sign-ups. Hauenstein said Delta saw a record number of applications for the credit card and is “seeing the highest premium acquisition mix in our program’s history.”

Hauenstein added that loyalty revenue for Delta grew by 12% on the strength of the AmEx partnership. Delta also received $1.7 billion in remuneration during the first quarter for the credit card. 

The Return of Regional Flying

Regional flying has struggled since the pandemic due to a pilot shortage in the industry. Airlines have also been phasing out smaller aircraft in favor of larger ones.

But a goal for Delta is to fully restore its regional flying, Hauenstein said, as pilot hiring for the carrier has stabilized. Delta is also slowing down pilot hiring in 2024 for much of the same reasons. 

Delta also has a total of 100 regional jets that are either underutilized or not in service, Hauenstein said. 

The effort to restore some of Delta’s regional network is part of a larger initiative to also strengthen some of its hubs. Since the pandemic, Delta saw record growth in coastal areas like Boston, Los Angeles and New York. 

Hauenstein said Delta wants to add more seats in core hubs like Atlanta, Detroit and Minneapolis-St. Paul, where their cost structures are “most advantaged.”

“Coming out of COVID, we had to allocate the resources we had available,” Hauenstein said. “And those resources went to our once-in-a-lifetime opportunities to take leading positions in places like Boston and Los Angeles at the expense of rebuilding our core hubs, and we’re still not done building our core hubs.”

Delta-Aeromexico vs. DOT

Under the Biden Administration, the Department of Transportation has taken a more hawkish stance on competition in the airline industry. In January, the DOT ordered Delta to end its joint venture with Aeromexico on the grounds that the partnership is anti-competitive. Delta has since appealed the decision. 

Delta executive vice president of external affairs Peter Carter said the airline expected the DOT to come to a compromise on the decision, calling it a “regulatory overreach.”

“Our strong view is the DOT really struck out on that one,” Carter said. “This was an example of regulatory overreach, which is why we’ve challenged it. It’s bad for consumers, it’s bad for competition. It’s bad for the local economies that those flights have served.”

Carter said Delta was in discussions with the DOT about less drastic measures than the one announced in January. 

A Healthy First-Quarter Profit

Delta made $37 million during the first quarter, recouping from a $363 million loss from the same time last year. The carrier also reported earnings per share of 45 cents, or $288 million in adjusted earnings during the first three months of 2024. Operating revenues were at $12.6 billion, a 6% increase from the same period last year. 

Airlines Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance

Read the full methodology behind the Skift Travel 200.


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Tags: aeromexico, corporate travel, delta air lines, domestic travel, dot, international travel, Paris Olympics, premium travel

Photo credit: The upcoming Delta Airbus A350 Airbus / Airbus

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