Delta Air Lines published its third-quarter results yesterday. Along with headline figures that demonstrate clear patterns of growth and profitability, Delta has also gone a full one-third of the year without a single flight cancellation. It achieved a load factor of 90% between April and August, and has had what CEO Ed Bastian calls its ‘busiest summer ever’.
123 days without cancellation
During Delta’s third-quarter earnings call, Delta CEO Ed Bastian said,
“We’ve now had 123 days without a single cancellation across the entire Delta system this year, a 23% improvement over last year’s record performance. This unprecedented level of reliability combined with great service from our team continued to drive higher customer satisfaction and growing brand affinity for Delta.”
Going for a third of a year with zero cancellations is quite an achievement for the airline, and stands it well ahead of its two main rivals, American and United.
Although American achieved the best on time performance for two years last month, that came on the back of a record number of flight cancellations and bumped passengers as the airline struggled to cope with the loss of the 737 MAX.
United are similarly on the back foot, with some months seeing more than 2,000 flight cancellations due to the loss of the 737 MAX.
Delta, of course, has no Boeing 737 MAX in its fleet. As Bastian admitted in the conference call, “we certainly were a beneficiary of the MAX not operating.” However, he also points out that it was not just other airlines’ underperformance that made for a great quarter, but also that some merit should be given to Delta’s own improvements in service and product.
A 90% load factor
Delta enjoyed a 90% load factor almost continually from April through to August. The airline cited summer 2019 as its busiest summer ever, saying that it carried 3.3m more passengers than last year, a growth of 6%.
As such, the revenue for the third quarter was at an all-time high too, raking in a tidy sum of $12.6bn in revenue, up 6.5% from 2018. However, this was not all from flights taken, as the airline noted more than half of its revenue (52%) came from “premium products, loyalty, and other non-ticket revenue sources”.
Its pretax profit stood at $2bn, up $350m from last year. Bastian noted that the airline is on track for its fifth year of pretax profits in excess of $5bn. In an environment where many carriers both large and small continue to struggle to stay afloat, posting profits like this is a testament to what Delta is doing right.
LATAM worth $1bn
Delta’s recent investment in LATAM was a strategic move by the airline. Prior to the investment, Delta was the number four carrier in South America. By adding a joint venture with LATAM, once approved Delta will be in the combined number one position on the continent.
Bastian says this is expected to be a fruitful partnership that will bring solid increases in revenue, commenting on the conference call that,
“We expect this partnership to translate to $1 billion in new annual revenue over the next five years and improve returns in the Latin entity. Along with our existing partnerships with Aeromexico and WestJet, we’re creating a true carrier of the Americas with the ability to connect travelers as never before.”
Delta is on track to surpass a 7% growth figure over the course of the year. Clearly, this is one airline that the curse of 2019 has chosen to spare.