Delta Air Lines on Wednesday reported a quarterly profit thanks to travelers willing to pay up to fly, more than making up for higher costs.
The carrier also vowed to improve reliability after an increase in delays and cancellations prompted it to scale back its summer schedule.
The airline industry “was starved for revenue for the last two years,” CEO Ed Bastian told CNBC’s “Squawk Box” on Wednesday after the carrier released results. “We pushed too hard. We scaled back a bit … and in July we’re running a great operation.”
Delta shares fell more than 4% Wednesday after its adjusted earnings fell short of analyst estimates. Rivals’ shares also dropped more than the broader market, which slumped after inflation data came in higher than expected.
Airfare represented one of the few declines in the U.S. inflation report, dropping a seasonally adjusted 1.8% from May to June after large increases.
Delta is capping its expansion, keeping third-quarter capacity to between 83% and 85% of 2019 levels, as it faces backlogs in training new staff.
The company expects a third-quarter profit and reiterated its forecast for full-year profitability.
It expects third-quarter sales to rise 1% to 5% compared with three years ago, along with increased costs, a sign of confidence that it expects fares to remain elevated.
Delta is the first U.S. airline to report earnings for the second quarter. United Airlines and American Airlines announce next week.
Here’s how the company performed in the second quarter compared with what analysts expected, according to average estimates compiled by Refinitiv:
Adjusted earnings per share: $1.44 versus $1.73 expected.
$1.44 versus $1.73 expected. Revenue: $13.82 billion versus $13.57 billion expected.
Despite problems during the start to the summer travel season, demand rose for both business and leisure travel, Delta said. Domestic corporate travel sales are 80% recovered from before the Covid pandemic, up 25 percentage points from the first quarter of the year, it said.
Delta’s costs for each seat it flew a mile, excluding fuel, were up 22% from 2019 for the three months ended June 30. Its fuel expense rose 41% from three years ago to $3.2 billion.