Delta Air Lines, which posted a narrow first-quarter profit, said Wednesday that travel demand is strong heading into the summer vacation season. Travelers seem unfazed by recent incidents in the industry, from jetliner panels blown off mid-flight to plane crashes. A tire fell off another plane during takeoff.
Delta Air Lines reported record first quarter sales and a profit of $37 million. The company expects record profits for this quarter as well. The Atlanta-based airline said second-quarter profits are likely to beat Wall Street expectations.
CEO Ed Bastian said Delta's 11 days of record ticket sales occurred in the first few weeks of 2024.
If travelers are worried about a spate of problem flights and increased scrutiny of plane maker Boeing, “I don't see that,” Bastian said in an interview. “I just look at my numbers. Demand is the healthiest I've ever seen.”
Delta Air Lines' fleet of more than 950 aircraft is slightly dominated by Boeing, but in recent years it has bought primarily from Airbus, with an order for 20 large Airbus A350s in January. As a result, Delta Air Lines avoids the dilemma faced by rivals United Airlines and American Airlines, which are unable to obtain all the Boeing aircraft they have ordered. United Airlines is asking its pilots to take unpaid leave in May due to a shortage of planes.
“Airbus has consistently met its delivery targets over the past five years,” Bastian said.
Delta Air Lines does not operate Boeing 737 Max aircraft. The plane was grounded around the world after two fatal crashes in 2018 and 2019, and a panel ruptured on an Alaska Airlines flight this year. But Delta Air Lines has ordered a new, larger version of the Max, which has yet to receive regulatory approval. Bastian said Delta would be happy to use the Max 10 once it arrives.
Delta Air Lines' first-quarter profit followed a $363 million loss a year ago, when spending on new pilot labor contracts weighed on results.
“We expect Delta to be one of the few airlines to report a profit in the March quarter,” TD Cowen analyst Helane Becker said before the airline's results.
Delta Air Lines said it earned 45 cents per share, excluding special items. Analysts polled by FactSet had expected 36 cents a share.
The company expects second-quarter earnings to be between $2.20 and $2.50 per share. Wall Street consensus was $2.22 per share.
First-quarter sales rose 8% to $13.75 billion. Excluding Delta Air Lines' Pennsylvania refinery, operating revenue slightly exceeded analysts' expectations. The company said second-quarter sales will increase 5% to 7% compared to the same period last year.
The airline reported that its large corporate customers (including technology and financial services companies), which had been slower to resume flights than leisure travel after the pandemic, are spending more on travel.
Delta Air Lines boosted profits by focusing on premium passengers who pay the highest fares and raking in revenue from a credit card partnership with American Express.
However, costs may also increase. Jet fuel is more expensive than a year ago due to high oil prices, and Delta Air Lines is spending more on aircraft maintenance this year.
