Monday, September 26, 2022

Delta sharply raises Q2 revenue outlook on higher airfares

To hear it from Delta Air Lines, the happy days are here again, with travelers happily paying higher fares to get on an airplane and get somewhere this summer.

Delta said Wednesday that it expects second-quarter adjusted revenue to return to pre-pandemic 2019 levels, and revenue per seat should be 8 percentage points better than Delta originally expected.

During an investor conference, CEO Ed Bastian said passengers are paying more for any type of seat, from basic to premium.

“We expect pricing to average somewhere between 25% and 30% this summer,” Bastian said. “We’ve never seen anything of that scale.”

However, the Atlanta-based airline is facing rising jet fuel prices. Other expenses – mainly labor – are also rising. Delta expects non-fuel costs to rise 22% from 2019 levels on a per-seat basis, more severe than mid-April’s forecast of 17%.

Shares of Delta fell 5% in morning trading, with a mixed outlook, and shares of other airlines were even lower.

A surprisingly strong rebound in air travel this year has allowed airlines to hike fares higher, but has also left them struggling to handle crowds with fewer workers than before the pandemic. Staffing issues contributed to widespread cancellations and delays in the Memorial Day holiday period.

Delta scrambled more than any other major US airline, canceling more than 800 canceled flights during a five-day period. The union representing Delta’s pilots blamed the imprudence.

Bastian said Delta’s corps of 12,000 pilots is quite large, but it will take eight to 12 months to train new and existing ones, who will replace the 2,000 senior pilots who retire or leave during the pandemic.

The CEO said the airline — which last week cut its planned summer schedule by up to 3% — is building up more time between flights and is tweaking its schedule at the Atlanta airport to keep operations running smoothly. .

Nation World News Desk
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