Business travel

Recession? Not in our world, says Delta Air Lines. “The demand is not about to be extinguished.”

Investors on Wall Street, the Federal Reserve and Jamie Dimond can all worry about a recession. Delta Air Lines is not.

“The airline industry, not just Delta, is in a countercyclical recovery.” Bastian said on the carrier’s third-quarter earnings call. “We are still rebuilding where we were (so) the supply in the market has taken into account the risk of recession.

“Our crystal ball is good for 90 to 100 days,” Bastian said. “After that it gets a little fuzzy. From what we can see, from what our larger companies are telling us, the travel business will be very strong through the quarter and into the new year.

“The demand is not going to be extinguished any time soon,” he said.

Delta shares closed Thursday at $30.38, up about 4%, ahead of the S&P 500’s 2.6% gain. American, JetBlue, Southwest and United rose about 3%, while Spirit increased by about 5%.

Delta, the first airline to report earnings, enjoyed a second straight profitable quarter and, more importantly, forecast strong future demand for business and international travel, which had been weak spots early in the pandemic recovery.

“With improved business travel and strong domestic and international demand, we expect December quarter revenue to grow 5% to 9% from the December 2019 quarter,” said President Glen. Hauenstein in a prepared statement. percent higher and international passenger revenue was recovered 97% from the September 2019 quarter, the carrier said.

As for business, which has also been slow to recover, Delta said large business sales “increased after Labor Day and are at the highest recovery rates since the start of the pandemic, coming out of the quarter at 80% of 2019 levels”.

International unit revenue growth outpaced domestic market growth for the first time since the pandemic, Delta said. “Transatlantic demand was driven by leisure destinations such as Italy, Spain and Greece and improving business demand, with transatlantic revenues up 12% compared to 2019.”

On the call, Hauenstein said, “We’ve missed three years of leisure travel demand to Europe,” adding that “transatlantic travel demand extends into the fall.”

He noted that during the pandemic Delta wanted to improve its position in coastal gateways including Boston, Los Angeles and Seattle, but now the focus has shifted to domestic hubs in Atlanta, Detroit, Minneapolis and Salt Lake City.

During the pandemic, “we have choked off more of our traditional flow in very key markets where delta has historically been, particularly in the southeast. Our task has been to bring our historic high yield (customers) back to Delta. That could mean more competition for American, which during the pandemic has bolstered its position in the Southeast by rapidly restoring capacity at its Charlotte hub.

According to Bastian, “We’ve been by far the most cautious about rebuilding our network, given that we want to be sure we’re doing it reliably.”

For the third quarter, revenue was approximately $14 billion, while adjusted revenue was $12.8 billion, 3% higher than the same quarter of 2019. Net income was $695 million or $1.08 per share, down from earnings of $1.5 billion in 2019. Operating margin was 11.6% and earnings per share were $1.51, including a negative impact of three hundred due to Hurricane Ian.

Ian decreased September revenue by $35 million, due to cancellations and weak bookings, and a similar impact is expected in October.