Delta Air Lines posted its highest-ever quarterly earnings and revenue on Thursday, underscoring unrelenting demand that has been graded. this summer travel season and despite reports of flight discounts.
With $14.6 billion in adjusted operating revenue for specials, Delta had $2.5 billion in earnings, posting a high 17.1 percent margin. The airline’s total net income was $1.8 billion, in part due to strong demand driving up fares, as well as falling fuel costs.
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The airline also raised its forecast for the rest of the year, expecting strong demand to continue through the fall and holiday seasons.
Even though total airfares decreased by 19% in the past year, according to a Consumer Price Index report released by the US Department of Labor this week, Delta noted that it has seen strong pricing power in play. The airline’s total revenue per available seat mile, or unit revenue, was up 1% year over year, despite a 17% increase in capacity.
“Methodology [for the CPI] is a sample of a sample,” airline president Glen Hauenstein said on the airline’s earnings call with investors and reporters on Thursday. “We don’t see that; that’s a different data point from what we have and we’re seeing.”
Even as unit sales rise, Hauenstein thinks the airfare market is stabilizing, saying last summer’s high demand — but low supply — has pushed prices unusually high.
“People don’t care where they’re going or how much they’re going to spend. They just want to get somewhere,” he said of last year. “We’ve seen fares go up 30, 40, 50 percent, especially in domestic markets where they can travel.”
“We are now at a much more normal stability in the fare environment,” he added.
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Domestic sales grew 8% year-over-year, driven in part by increased capacity, while international sales grew 61% due to strong transatlantic demand and reopening in Asia. Southern European destinations lead the way in demand, the airline said in its earnings report – CEO Ed Bastian told CNBC that he himself recently traveled to the south of France.
Notably, the share of revenue from sales of premium and upgraded cabin seats grew 25% during the quarter, outstripping the usual economic growth rate and continuing a trend Delta has seen emerge during the period. reopened due to pandemic.
With demand expected to remain strong throughout fall, the typical pre-holiday “shoulder season” may not offer the usual price respite, at least for some destinations. popular — the peak tourist season in Southern Europe lasts longer in the fall than Hauenstein says it did before the pandemic, while Northern Europe is seeing a shorter season.
However, there may be other destinations with regular seasonal discounts, while deals for even the hottest destinations still pop up regularly.
Related: When to book flights to get the cheapest fares?
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