Delta CEO on Q2 earnings beat: We see 'more of the same'
Delta Air Lines CEO Ed Bastian spoke with Yahoo Finance about airline's Q2 earnings beat, its loyalty program, travel demand.
Delta Air Lines (DAL) reported record revenue and profit in the second quarter, topping expectations while pointing to a healthy premium consumer whose "top priority for spend is an extreme travel experience," CEO Ed Bastian told Yahoo Finance.
Here's what Delta reported versus Wall Street consensus estimates compiled by Bloomberg.
Adjusted net income: $1.72 billion vs. $1.54 billion expected
Adjusted earnings per share: $2.68 vs $2.41 expected
Revenue: $14.6 billion vs $14.4 billion expected
The company also raised its full-year earnings guidance to $6.00-$7.00 from the prior forecast of $5.00-$6.00.
"What we see in our whole bookings is really more of the same that we've been seeing all year," Bastian said. "Our international bookings and demand look really strong, so I think we're looking at a very, very strong Q3, as indicated by our guidance, and I think we'll have a strong Q4 as well."
Delta stock was up around 4% in premarket trading on Thursday. Year to date, shares of Delta are up 45%, outperforming the S&P 500's 16% gain as well as airline industry peers.
The airline's management attributed that outperformance to its differentiation with premium consumers and international travel.
"Our consumers have the means," Bastian said. "They have the interest, and we're doing the very best job to provide them a reliable service so we can get them to where they need to be."
Travel demand 'quite healthy'
During 2023, TSA passenger throughput has kept pace with pre-pandemic comparisons; from the beginning of March through the end of June, the average daily number of total passengers screened was 99.99% equal to the daily average for the same period during 2019.
"International is the healthiest demand that we've ever seen," Bastian said. "Domestic continues to be quite healthy."
While the June Consumer Price Index showed airfare prices continued to soften, Bastian noted "that's not really a great representation of our business" and that Delta's "revenue base is quite healthy."
For the quarter, Delta reported 18% growth year over year in its main cabin passenger revenue and 25% growth in premium ticket passenger revenue.
June 30, which set a new record for overall airline passenger volume, was Delta's highest summer revenue day on record, the company said, fueled by continued spending on services and overall economic growth.
"When you look on an economic level, the flip that we've seen where goods have overtaken services in our economy and services are coming back, ... we think there is easily several years of this continuing," Bastian told Yahoo Finance. "We all look back to '19, but our economy is also over 20% larger than it was in '19 as well, so that's also helping fuel the larger gain that we're seeing."
Delta announced another record this quarter in the number of SkyMiles reward member additions, amassing 3 million new passengers in the program.
"We have seen a significant pop in our membership ranks, principally coming from younger consumers — the individuals that we are signing on the planes themselves as well as people signing up before the plane," Bastian said. "Our sky miles average age was around 40. We're finding the average age of our new customers signing up to be approximately 30, so we're creating products and value that they want."
"We're building a new generation of loyalty," Bastian added.
Brad Smith is an anchor at Yahoo Finance. Follow him on Twitter @thebradsmith.
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