Delta’s quarterly profits drop despite solid demand

NEW YORK

Delta has reported lower quarterly profits despite still-strong travel demand as it moderated a plan to add capacity in the fall in light of industry overcapacity.

The big U.S. carrier, which saw jet fuel and salary costs increase in the second quarter, also projected lower than expected third-quarter profits, hitting airline shares amid investor concerns over weakening airline fares.

Executives offered an upbeat outlook on demand during a conference call, but the company also described growth as "normalizing" after a huge uptick following COVID-19 lockdowns.

"Travel remains a top purchase priority, and Delta's core customers are in a healthy position," Chief Executive Ed Bastian said on a conference call with analysts.

Profits for the quarter ending June 30 were $1.3 billion, down 29 percent.

Revenues rose seven percent to $16.7 billion, a record for the June quarter.

The company confirmed its full-year projections, but its third-quarter profit forecast range was below median analyst estimates.

Bastian expressed confidence in a "more constructive industry backdrop" in the second half of 2024 as rival carriers focus on profitability through higher fares

Delta now expects third-quarter capacity growth of five to six percent, a bit below the increase in the second quarter.

Bastian emphasized Delta's efforts to win over premium consumers in a market in which "value" has shifted from the lowest price to a "better quality experience" that includes a focus on reliability.

The company is investing in new customer lounges in Boston, Los Angeles and Seattle and in programs to improve in-flight Internet service.