Delta Air Lines’ chief executive said the carrier has sold a record number of tickets in the past five weeks as customers set aside their concerns about inflation to splurge on air travel.
“We’ve . . . sold more tickets, in that time, than any period in public history,” Ed Bastian told the Financial Times in an interview. “We’re seeing no signs of any customer reticence around inflation” or health concerns.
The Atlanta-based carrier remains bullish on demand despite rising fuel costs because it is “successfully recapturing” the higher prices, Bastian said.
The average fare for US airlines’ domestic tickets purchased one week from the date of travel was $214 on April 4, up 4.3 per cent over the previous week, according to Raymond James analysts.
Delta, the third-largest airline in the US, on Wednesday reported an adjusted net loss of $784mn for the first quarter of 2022, or $1.23 per share. The loss was better than expected because of a profitable March.
With consumer demand accelerating, the company said it expected a “solid” profit for the second quarter, with a 12 to 14 per cent operating margin, and a “meaningful” full-year profit.
Adjusted first-quarter operating revenue of $8.2bn was 21 per cent lower than in the same period of 2019. The carrier expects revenue to reach near its level from before the coronavirus pandemic in the second quarter, with premium seats leading the recovery.
Seat capacity was 83 per cent of its 2019 levels, and that figure was expected to tick up to 84 per cent in the second quarter. Bastian said it was possible for capacity to be 100 per cent restored by the end of the year, though Delta was not planning on it.
“One of the constraints around why we don’t have more [capacity] is concern around staffing,” Bastian said, particularly outside of the US. Bastian previously said that Delta would hire 5,000 to 10,000 new employees this year.
One of the biggest bottlenecks in the US is a pilot shortage at regional airlines, which mainline carriers contract for short-haul routes.
The airline also has to see “where oil prices will go” as they continue to rise, and “consider whether we can afford to fly certain routes”, Bastian said.
Delta consumed 751mn gallons of fuel in the first quarter, at an average price of $2.79 per gallon for a total of $2.1bn. Fuel in the second quarter is expected to cost the company $3.20 to $3.35 per gallon.
Though the airline must be “mindful” about fuel prices, summer demand is “looking really healthy”, Bastian said.
Business travel has also accelerated, with domestic corporate sales in the first quarter of 2022 at half what they were in 2019, rising to 70 per in March.