They are scenes straight out of a travel nightmare: Airline passengers, including unaccompanied minors, stranded for days in strange cities amid a cascading wave of flight cancellations—with little hope of catching a plane home in a hurry.
16.07.2024 - 20:22 / travelpulse.com / Ed Bastian / Delta Air Lines / Rich Thomaselli
It was a bittersweet moment for Delta Air Lines CEO Ed Bastian.
Second quarter earnings for Delta were up, but did not exceed analyst expectations, causing Bastian to voice some concerns about the industry.
Delta still had a record quarter, but its growth of four percent fell short of analyst predictions of nearly six percent.
Bastian said on an earnings call, "What you see happening is the impact in the domestic marketplace to the lower fare discounting that's been going on this quarter."
Analysts at TD Cowen sent a note that said Delta's numbers would "likely raise concerns about industry health and lead to more pressure on low-cost carriers and ultra-low-cost carriers to cut capacity."
Low-cost carriers have been cutting capacity in the hopes that their respective bottom lines would balance out. It has led to some trepidation by Bastian and others about the health of the industry overall. His words echoed with investors last week as Delta stock was down almost five percent even though he said the company was “fairly well insulated.”
He can afford to say that, pardon the pun, since Delta is the financially strongest airline in the country. But other carriers are not on equal footing. Even mighty American Airlines said it would have to cut capacity.
Bastian is concerned from an industry standpoint because low-cost airlines have little wiggle room to operate since they don’t – or can’t – offer higher seating fares to make up the difference in any loss of revenue. But even though he said he expects travel demand to decrease in the fall, he is optimistic.
"We are encouraged by actions the industry is taking," he said. "Seat growth is decelerating, and there appears to be increased focus on improving financial performance."
Delta, in fact, recently expanded its service to the Cayman Islands.
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