Delta Air Lines managed to squeeze out a slim profit in Q1, but maintains demand for travel remains robust despite recent flight problems.
Delta made a $37million profit and boasted its highest ever revenue for a Q1, anticipating this record-breaking trend will continue into the current quarter. Chief executive Ed Bastian revealed that Delta's most successful 11 days of ticket sales occurred during the early weeks of 2024.
If travelers are worried about a spate of problem flights and increased scrutiny of plane maker Boeing, “I haven't seen it,” Bastian said in an interview. “I only look at my numbers. Demand is the healthiest I've ever seen.”
However, recent purchases have predominantly been Airbus models, including a January order for 20 sizable Airbus A350s. This means Delta will sidestep the issues currently faced by rivals such as United Airlines and American Airlines, who are unable to receive all the Boeing orders they placed.
As a result, United is even requesting pilots to take unpaid leave in May due to this shortage of planes. "Airbus has been consistent throughout these last five years (at) meeting their delivery targets," Bastian said.
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Delta does not operate any Boeing 737 Max jets, the plane that was grounded worldwide after two fatal crashes in 2018 and 2019, and which suffered the panel blowout on an Alaska Airlines flight this year. However, the Atlanta-based airline has ordered a new, larger version of the Max that still hasn't been approved by regulators.
Bastian said Delta will be happy to use the Max 10 when they arrive. Delta's first-quarter profit follows a $363million loss a year ago, when the results were weighed down by spending on a new labor contract with pilots. "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 Delta's results were released.
First-quarter revenue rose 8%, to $13.75billion. Putting Delta's Pennsylvania refinery aside, operating revenue was slightly more than analysts predicted. The airline said second-quarter revenue will be 5% to 7% higher than a year ago.
The airline revealed that big corporate clients, who were slower to return to flying post-pandemic than leisure travellers, are now splashing out more on travel. This includes companies in the tech and financial services sectors.
Delta has managed to increase its profits by shifting its focus towards premium passengers who shell out for the highest fares, as well as making a tidy sum from a credit-card partnership with American Express. However, costs could also be on the rise. Jet fuel is pricier than it was this time last year, following an increase in oil prices, and Delta is shelling out more on aircraft maintenance this year.
Shares in Delta Air Lines Inc. saw a rise of over 2%.
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