Increasing business travel volume throughout the first quarter helped Delta Air Lines turn a profit in March and increase corporate airfares to 2019 levels, the carrier’s executives reported Wednesday during a quarterly earnings call.
Domestic business travel sales at the end of the first quarter had increased to about 70 percent of first-quarter 2019 levels, Delta president Glen Hauenstein said, and the carrier expects that figure to increase to the low 70s in the second quarter. In an internal survey of its corporate clients Delta conducted, about 90 percent of respondents indicated plans to increase business travel in the second quarter, he said.
“We are seeing more corporates implement changes to travel policies,” Hauenstein said. “For example, domestic travel restrictions have been completely removed for all of our top corporate accounts. And increasingly, corporates are allowing upsells to premium cabins and refundable products.”
Hauenstein called the first quarter “a tale of two halves,” noting bookings increased substantially after the Presidents’ Day holiday in February, after the U.S. Covid-19 omicron variant outbreak began to wane. The increased demand helped Delta increase corporate fares to the point that in March they exceeded 2019 levels, the first month in which that has happened since the pandemic began, he said.
Q1 Metrics
Delta reported $6.9 billion in first-quarter passenger revenue, down 25 percent from the first quarter of 2019. The carrier reported adjusted operating revenue of $8.2 billion, which it said was 79 percent recovered versus first-quarter 2019, and $9.3 billion in operating revenue.
“We are greatly encouraged by the momentum we are seeing, and we remain confident in our outlook for meaningful full-year profit for 2022,” Delta CEO Ed Bastian said.
Delta projected second-quarter system capacity of about 84 percent of 2019 levels, up slightly from the 83 percent recorded in the first quarter. Hauenstein characterized the small increase in capacity ramp-up as a matter of prudence.
“As we get through the year, if these demand trends continue, we have the opportunity to take another tick-up, or we could pivot in a different direction if warranted,” Hauenstein said. “But I think it has made it very clear to us that being nimble until we get to the very end of this is the key to our success.”
Delta’s adjusted first-quarter fuel price of $2.79 per gallon was up 33 percent from the fourth quarter of 2021, and the carrier projected second-quarter cost of $3.20 to $3.35 per gallon.
Easing Requirement?
Like many international U.S. carriers, Delta has called for the U.S. government to drop its requirement that travelers to the U.S. submit a negative Covid-19 test before departure. Hauenstein and Delta EVP, chief legal officer and corporate secretary Peter Carter during the call suggested the requirement soon could be dropped, based on contacts in the administration.
“We were obviously engaged throughout the administration, and I will tell you that we are getting a strong indication that the testing will be phased out in the near future which is, of course, quite encouraging,” Carter said.
Meanwhile, Bastian said Delta has “not seen an impact to travel demand” from Russia’s invasion of Ukraine.
Delta Q4 results
Source by www.businesstravelnews.com