Delta Air Lines today shared that its domestic leisure travel is expected to be over 100% restored, which is up from 60% in March. Amid this progress, the airline’s CEO, Ed Bastian spoke about his company’s future in this next stage as the United States aviation industry recovers from the global health crisis.
A refined focus
The Atlanta-based carrier’s revenue for June is expected to be $6 to $6.2 billion. This figure is up from previous expectations of $3 billion expectation.
To keep the momentum going, there are three focus areas for Delta:
- The operator is looking to leverage brand loyalty by enhancing customer trust, brand, along with improving brand and product affinity.
- The company is keen to restore its balance sheet. It already has completed its initial phase of debt reduction. Now, it is evaluating further opportunities.
- It is eager to drive efficiency by targeting non-fuel cost per available seat mile (CASM) below pre-pandemic levels by the end of this year while it catalyzes its fleet renewal program.
Bastian shared the following about the airline’s progress during the Bernstein 37th Annual Strategic Decisions Conference:
“We expect to be solidly profitable, at the pre-tax level, in the month of June. We also expect to be profitable in the back half of this year. So inflecting to profitability just 15 months through the crisis is a pretty impressive statement about the resiliency of the business that we have created, and the great work of our people. We look forward to continuing to grow from here.”
There are revised angles across the company in this new climate. It is looking to maintain a younger fleet that is 25% more efficient while reducing mainline pilot categories to seven from 10. It is also looking to leverage larger gauge planes to improve efficiency.
The airline is already back to 2019 levels on the acquisition of new Skymile members amid its program with American Express. Moreover, through the conditions, people are choosing to pay a premium to fly with Delta. Thus, there are new segments of passengers, namely in the SME business sector, emerging. Delta is keen to increase its presence in this field and the company usually primarily focuses on larger corporate clients.
“We also want to be the airline of choice in the midsize market for business as well. We’ve had a lot of opportunities to get closer to that marketplace during the pandemic. That segment of business travel is actually a bit larger than the traditional large corporate travel segment, and it’s also held up the best in the pandemic.”
Overall, Delta’s leadership predicts that volumes of domestic business travel for the first four months after July are actually going to be even higher “than what we saw in 2019 alone.” Notably, forward premium revenue growth is pulling ahead of main cabin income while upsell rates are advancing.
So, while leisure service naturally rebounds amid the relaxation of restrictions and vaccines continue to roll out, the airline is looking to grow its business revenues in the next half of 2021. Moreover, transatlantic demand is hoped to drive demand in this next chapter of recovery, with long-haul travel expected to recover in 2022.
Stay informed: Sign up for our daily and weekly aviation news digests.
The right steps
Altogether, even though there is still a long way to go for consistent market recovery across the board, Delta will be glad that it’s on the right track. It shares that with its approach, it is positioned to achieve 2019 revenues no later than 2023. With 2019 being a record-breaking year in the industry, the carrier will undoubtedly be satisfied if it reaches anywhere near those levels following this unprecedented industry crisis.
What are your thoughts about Delta Air Lines’ prospects during this recovery period? Are you looking to fly with the carrier this year? Let us know what you think of the airline and its operations in the comment section.