Delta Air Lines said on Wednesday it reported a loss of $940 million in the first three months of the year, as ticket sales slackened by higher fuel prices.
But the airline, which had expected a loss for the quarter, said its March operations were profitable and was able to pass some of the higher fuel costs along to customers.
The company reported adjusted operating revenue of $8.2 billion in 2019, down 21 percent from the same quarter and beating the forecast it issued earlier in the year. Delta said it expects second-quarter revenue to be down only 3 to 7 percent from a similar period in 2019.
“We returned to profitability in the month of March, with a strong rebound in demand as Omicron faded,” said Delta CEO Ed Bastian. The company was “successfully recapturing higher fuel prices.”
Delta said strong spring-break travel, office reopenings and the lifting of travel restrictions helped improve demand in the first few months of the year.
Domestic corporate travel had recovered nearly 70 per cent in March as compared to the same month in 2019. International business travel was restored by about 50 per cent. Delta also said that revenue from the sale of premium seats on domestic flights had fully recovered to 2019 levels last month.
However, high jet fuel prices slowed that pace. Delta reported paying an average price of $2.79 per gallon of fuel, up 33 percent from last quarter of last year. That price included a savings of 7 cents per gallon thanks to the airline’s oil refinery outside Philadelphia. The refinery also collected approximately $1.2 billion in revenue from third-party sales.
On Wednesday, the airline said it expects the fuel price to rise even more, to between $3.20 and $3.35 per gallon. It expects seating capacity to be restored to about 84 percent in the second quarter.
The industry started the year with widespread flight disruptions as staff shortages due to winter storms and the fast-spreading Omicron version of the coronavirus hampered its ability to handle the busy holiday season. At Delta, for example, about 8,000 employees — more than one in 10 — called in sick, the airline disclosed in January. At the time, Mr Bastian estimated that the version had delayed the airline’s recovery by about 60 days.
In January Delta said it expected losses that month and February, with a return to profitability in March. While Delta expected losses in the first three months of this year, it forecast profits during the rest of the year.
March started off strong, with many airlines reporting better-than-expected sales. But some of that improvement was offset by Russia’s invasion of Ukraine and high fuel prices caused by supply chain problems. Still, at an investor conference last month, American Airlines said it expects the additional revenue to outweigh the increase in fuel prices.
At the same conference, Delta President Glenn Hounstein said the airline could “easily” increase fares in the second quarter to make up for rising fuel costs, offsetting the cost faster than usual as customers approach the travel date. Booking flights close by. , At the cost of a one-way ticket of about $200, the airline would need to recover $15 to $20, he said at the time. A United Airlines executive was similarly optimistic that the airline would be able to pass on the cost of fuel to customers in higher fares.
According to an analysis by the Adobe Digital Economy Index, the industry has recently turned a corner. In February, for the first time since the pandemic began, ticket sales for domestic flights exceeded those of the same month in 2019, according to the analysis. Adobe reported Tuesday that this trend continued last month, with rents increasing 20 percent from March 2019.
For the past several weeks, nearly two million people were screened daily at Transportation Security Administration security checkpoints, or about 90 percent of those screened in the same period in 2019.
Delta was the first major US airline to report its first quarter performance. American and United plan to report earnings next week, with Southwest Airlines expected to follow the week.