Delta says hiking fares can help it can turn a profit as fuel costs surge

Originally Published: 13 APR 22 08:02 ET


    (CNN) -- Travel is booming, and Delta Air Lines boosted ticket prices. That helped the company weather higher fuel costs in the first quarter, and Delta believes it can turn a profit in the second quarter.

The company reported an adjusted net loss of $784 million in the first quarter, which was about $50 million less than Wall Street analysts had expected. Its revenue of $9.3 billion came in about $400 million higher than forecasts. The company said it was profitable in March.

The first quarter is typically the slowest for US airline profits and revenue. But the second quarter, which includes the spring travel season and the start of summer travel, should be stronger.

A growing number of workers are returning to the office after two years of remote work, and business travel is expected to pick up. So is international travel. Those passengers typically pay higher fares than leisure travelers on domestic flights.

Delta said it expects sales in the second quarter to be between 3% and 7% lower than in the same period of 2019, before the pandemic severely disrupted air travel. Yet Delta is flying just 84% of the capacity it flew back then. It's managing to keep sales relatively high by packing planes and hiking fares. Unit revenue, a measure of airfares, should be up more than 10% in the second quarter compared to 2019, Delta anticipates.

"Delta is well-positioned to capitalize on robust consumer demand and an accelerating return of business and international travel," said Delta President Glen Hauenstein.

Still, Delta and the rest of the airline industry face surging fuel prices.

Delta said it expects to pay an average of $3.20 to $3.35 a gallon for jet fuel in the second quarter, up from $2.79 a gallon in the first quarter and only $2.06 a gallon in the first quarter of 2019.

Shares of Delta jumped 6% in premarket trading on the news.

The-CNN-Wire
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