Delta CEO Ed Bastian offered his “sincerest apologies” on Wednesday to customers who were impacted by the carrier’s cancellations, delays and other operational failures over the late spring and early summer.
“The issues we are seeing are temporary. We are already seeing significant improvement,” Bastian said during Delta’s Q2 earnings call with investors.
Meanwhile, Delta presented a bullish outlook.
“We are seeing demand and pricing strength carry into the late summer and fall,” Delta president Glen Hauenstein said.
Delta’s mainline customers suffered through a cancellation rate of 3.3% in June, and 20.6% of the carrier’s mainline flights arrived at least 15 minutes late, according to flight tracker FlightAware. In addition, Delta’s regional subsidiary Endeavor cancelled 6.5% of its flights in June.
On Wednesday, Delta reported that thus far in July it has canceled just 0.8% of flights systemwide and has brought its on-time percentage — defined by the DOT as flights that arrive within 14 minutes of schedule — to 84%. Those statistics include mainline Delta flights as well as the Delta Connection flights operated by Endeavor and Delta’s other regional partners.
Bastian said the improvements are the result of changes Delta has implemented, including shelving plans to grow the network and allowing more time for the boarding process. In addition, he said, the carrier has made strategic scheduling adjustments for flight attendants and pilots, which has helped the operation.
He explained that as Delta has begun improving its operation, those improvements have created their own positive momentum.
“You run a better airline, and everything runs better and the efficiencies just start to materialize,” Bastian said.
In the second quarter, Delta’s flown capacity was 82% of what it flew in 2019. The carrier said that it expects third-quarter capacity to increase only slightly, with total seat miles expected to be 83% to 85% of the 2019 level.
Bastian and Hauenstein emphasized that absent an unforeseen return of operational struggles, Delta should enjoy continued strong demand during the third quarter. Pent-up travel demand, Bastian said, had built for two years prior to recent months.
“We’re not going to satisfy that demand in one busy summer,” he said.
Furthermore, said Haunstein, some potential customers who were priced out of the market over the expensive summer months will likely fly during the historically less expensive fall period.
Business travel on the rebound
Hauenstein also said he expects fall demand to be boosted by the continued resumption of business travel. Delta reported that domestic corporate sales for the second quarter were 80% recovered compared to 2019, and international corporate sales were 65% recovered.
Recent corporate surveys have Delta expecting more improvement when the traditional fall business travel season ramps up. The carrier projects that total revenue for the third quarter will be 1% to 5% higher than the third quarter of 2019.
For the second quarter, Delta reported passenger revenue of $11 billion, down just 4% from 2019 despite flying 18% less capacity. The carrier’s operating revenue, fueled by sharp increases in co-branded credit card earnings, was $13.8 billion, up 10% from 2019 and $400 million better than analyst expectations, according to the investment site Seeking Alpha.
Delta recorded net income for the second quarter of $735 million compared to net income of $1.44 billion in Q2 of 2019. A 41% increase in fuel costs compared to 2019, as well weaker aircraft utilization rates and higher staffing costs, accounted for much of that difference.
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