Delta can't escape problems plaguing US airlines as it tries to stay ahead of the pack

13.07.2024 - 14:00 / thepointsguy.com / Ed Bastian / Delta Ceo

It appears Delta Air Lines is not, in fact, immune from a problem that's plagued most of the U.S. air travel industry over the past year: high costs and stiff competition.

The Atlanta-based carrier made over $1.3 billion between April and June, the company said Thursday. To be clear, that's quite possibly the best any airline will do — although we'll have to see how United Airlines does next week.

But Delta's profitability fell below Wall Street expectations and its own performance in the second quarter last year.

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It's the latest example of a major U.S. carrier's disappointing financial results despite surging demand for air travel in recent months.

July 7 was the busiest day ever at U.S. airports, with the Transportation Security Administration reporting more than 3 million passengers were screened for the first time in history. Nine of the 10 busiest days ever at TSA checkpoints have come since Memorial Day weekend.

But it's not translating to record success for airlines.

Carriers are facing higher costs for fuel, staff and maintenance — not to mention the effects of fierce competition owed to a marketplace flooded with capacity.

Between April and June, airlines flew a total of 5.6% more seats on domestic routes versus last year's second quarter, according to data from aviation analytics firm Cirium.

Domestic seats were up 6.5% over 2019.

As TPG reported in June, all those flights — and seats — have pushed fares down, given the laws of supply and demand. That's made a glut of flight deals available that travelers haven't seen in a few years. It's been welcome news for customers but less so for airlines trying to turn profits.

Other airlines have reported struggling to fill all these seats and make money for months. Budget airlines have spent much of 2024 shuffling networks, often pulling planes out of especially competitive cities like Orlando.

Southwest Airlines lowered forecasts for its financials last month. American Airlines did the same — and its CEO recently bemoaned the toll that recent "discounting" activity has had on the airline. The loss of pricing power, combined with the fallout from a corporate sales strategy that backfired, could heighten the tension on its earnings call later this month.

But we've heard nary a concern (until now) from Delta, which has perpetually led all U.S. airlines in profitability since the coronavirus pandemic.

"Domestic industry seat growth has accelerated through the summer months, impacting yield performance in the main cabin," Delta CEO Ed Bastian acknowledged, speaking on a conference call with analysts Thursday.

It begs the question: If Delta has run into a hiccup, what does