Delta: Corp. Travel ‘Enabling’ Revenue Growth

Delta Air Lines’ corporate travel demand in the third quarter continued to “steadily improve,” particularly as “corporates continue with return-to-office initiatives,” executives said during a Thursday earnings call, reiterating what they had said during the prior quarter.

No one on the call shared volume or revenue recovery percentages, but CEO Ed Bastian said that “corporate travel has come back. It comes back and then plateaus, comes back and plateaus. And I think you’ll see another wave of return.” 

Bastian added that it’s a one of the “distinguishing factors” between Delta and some carriers “on the other end of the fare spectrum,” and that it is “one of many differentiating factors that is enabling us to grow revenue at the pace we are.” 

The carrier reported total third-quarter revenue of $15.5 billion, up 11 percent from a year prior. Passenger revenue was $13.1 billion, representing a 14 percent increase year over year.

Delta president Glen Hauenstein noted that “less recovered sectors like technology and financial services saw double-digit growth during the quarter.” He also said that entertainment production strikes have had a “not insignificant change in the business travel to and from Los Angeles,” and that the United Auto Workers strike has “curtailed a significant amount of the business in Detroit.” 

Still, Hauenstein said the carrier’s most recent survey of its corporate clients indicated a “significant majority” expect their travel to remain stable or increase “as we move into the fourth quarter and into 2024.” Demand from small and midsize companies and “hybrid travelers” remain “well above 2019 levels,” he added.

Bastian also repeated the company is reassessing the proposed changes to SkyMiles status earning requirements. No walkbacks were announced, but he noted that “you’ll be hearing from us in the coming days,” and that he received positive feedback as well as negative to the earlier announcement. 

“Most everyone agrees that something has to be done, because everyone sees that the premium number of customers that we continue to build are in excess of the premium assets that we have to offer,” Bastian said. “So, figuring out how to better rationalize and make certain that the service levels for our premium customers are where they need to be is … there’s various ways to get it.”

Delta Q3 Metrics

Delta reported third-quarter net income of $1.1 billion, up 59 percent from Q3 2022. Domestic revenue was up 6 percent from a year prior to $8.7 billion, while the Atlantic region was up 34 percent to $3.1 billion, Latin America gained 20 percent to $788 million, and the Pacific region was up 65 percent to $559 million.

Third-quarter average fuel costs were at $2.76 per gallon. Fourth-quarter fuel costs are projected to be $2.90 to $3.20 per gallon, according to Delta CFO Dan Janki. 

Delta’s guidance includes a projected 9 percent to 12 percent year-over-year increase in fourth-quarter revenue, and a projected 20 percent increase in full-year revenue. 

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