Planes have been packed to pre-pandemic levels this summer, and that is letting airlines take in enough money to cover higher fuel costs – and then some.
Delta Air Lines said Wednesday that it earned $735 million in the second quarter. Earnings per share fell short of Wall Street expectations, however, which the airline blamed on high fuel prices and more than 4,000 canceled flights in May and June.
“We had a rough six weeks,” CEO Ed Bastian said. “This is a company, this is an industry … none of us were up to our best.”
Shortly before July 4, airlines leaders were scolded during a virtual meeting with Transportation Secretary Pete Buttigieg, who implored the carriers to do better over the holiday weekend. They did — although airlines and federal officials have since traded blame for massive delays and cancellations so far this summer.
the Atlanta carrier had the most canceled flights over the Memorial Day and Juneteenth weekends. Bastian said Delta and other airlines tried too hard to make up for two years of pandemic and grab the most revenue they could while demand was hot. “We probably pushed ourselves too far,” he said in an interview.
Bastian said Delta recalibrated by eliminating planned growth this year, continuing to hire pilots and other workers, and relaxing the schedule by giving passengers more time to board.
The airline canceled 337 flights or about 1% of its schedule in the first 11 days of July, and just 83 after July 3, a major improvement over earlier in the summer, according to figures from tracking service Flightaware.
While vacation travel is booming, analysts have urged caution about the period after Labor Day. Business travel, which becomes crucial to airlines once families go home and kids return to school, has not recovered as quickly as personal travel. Employers are still hiring, but recession is being talked about more. Consumers are worried about inflation.
Delta is betting that consumers still want to travel and they have money, partly because they’re no longer buying as much stuff for their homes.
Delta predicted that third-quarter revenue will be 1% to 5% higher than in the same quarter of 2019, even though it expects passenger-carrying capacity to be no more than 85% of 2019 levels — a sign that Delta expects higher fares to remain in place.
Oil prices have cooled recently, and that could give another lift to Delta. The airline spent more than $3.2 billion on fuel in the second…
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