Delta Q3 Profit could signal pent-up travel demand

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Delta Airlines posted a larger increase in third-quarter financial results released Wednesday, October 13, reporting a profit of $ 1.2 billion, a positive sign of recovery for the entire airline industry.

In his earnings announcement, CEO of Delta Ed Bastien said: “Our September quarter marked a significant milestone in our recovery, with our first quarterly profit since the start of the pandemic.”

In a question-and-answer session with investors and analysts, Bastian said, “Our revenue recovery in the September quarter reached 66% of 2019 levels, from 51% in the June quarter and to only 25% at the start of this year. ” He also noted that “last week was our main corporate income reservation week since the start of the pandemic, and with the announcement of the US borders opening in November, reservations from Europe and Brazil to the United States are improving rapidly “.

Delta’s bullish earnings are being confirmed for the oppressed travel industry – and the good news didn’t end there. Bastian also said that “more customers are engaging with Delta than ever before, seeing record downloads of our Fly Delta app and record signups for our SkyMiles loyalty program.”

The Delta-American Express co-branded program “continues to demonstrate strong resilience, with card acquisitions restored to nearly 95% and card spend recovered to 115% from 2019 levels. As a result, compensation American Express during the September quarter topped 2019 levels, totaling just over $ 1 billion in the quarter, demonstrating the sustainability of our brand preference as we continue to deepen our customer relationships. “

The results match research from PYMNTS, which reveals that consumers are eager to board planes and re-book hotels. The latest in the Pandenomics report series, The Post-Pandemic Consumer At 18 Months: Spending Now, Worrying Later, found that 27% of consumers surveyed “plan to travel more to the United States, suggesting the country may soon experience an increase in domestic consumption. tourism.”

Read the study: The post-pandemic consumer at 18 months: spend now, worry later

A big week ahead as the report from other carriers

With major carriers, including United Airlines and American Airlines, releasing quarterly results on October 19 and 21, respectively, there is a growing sense that pent-up demand for leisure and business travel will help weather rising fuel costs. and the remaining COVID restrictions.

There are still unknowns hanging over Delta and its competitors as to what form the resumption of business travel will take after 20 months of Zoom calls replacing zoom flights to conferences.

Bastian responded to this question by saying, “In the September quarter, domestic business volume recovered by 40%, up 10 points from the June quarter. With the number of cases spiking to reopen offices, we didn’t see the progression we expected at the start of the quarter, especially after Labor Day. But as the variant recedes, business travel has picked up over the past month, with volumes now reaching the highest level we’ve seen during the recovery. Over the past week, our domestic business volume has been restored to almost 50%.

Regarding leisure and the overall outlook for the remainder of 2021, Bastian said, “We expect our revenue momentum to show good progress in the December quarter, ending November and December combined with an upturn. by 75%. This 10 point improvement from current levels is due to the reopening of offices, the easing of international restrictions and our expectation that consumer strength continues through the holidays. “

See also: Want to start the journey? Pile on Benefits and Memberships

The vaccine effect and other signs of recovery

With the study from PYMNTS, Post-Pandemic Consumer at 18 Months, finding that 50% of all consumers “now plan to shop, travel, dine and attend social events more often in the next three months,” the outlook de Bastian are more than wishful thinking.

Vaccines are essential for returning from travel and most other outgoing activities. This same PYMNTS study notes that “vaccines have played a key role in allaying consumers’ fears about the impact of the pandemic on their health and that of those around them. The more people get vaccinated, the less fear they are of contracting or spreading the virus. Seventy-one percent of all adult US consumers have received at least one inoculation, three times more than in February 2021. “

More or less confirming this, Bastian told analysts that Delta expects “continuous improvement with the reopening of offices at the start of the new year, and we expect a significant acceleration in business travel from that point on.” the. This sentiment is evident in our most recent business surveys. Over 90% of our respondents indicated that they expected travel volumes in the December quarter to be the same or higher than in the September quarter. “

Read more: Dynamic domestic summer travel suggests strong demand for vacations will follow

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NEW PYMNTS DATA: DIGITAL BANKING STUDY – THE BATTLE OF BREWING FOR WHERE WE WILL BANK

On: Forty-seven percent of U.S. consumers avoid digital-only banks due to data security concerns, despite considerable interest in these services. In Digital Banking: The Brewing Battle For Where We Will Bank, PYMNTS surveyed over 2,200 consumers to reveal how digital-only banks can boost privacy and security while providing convenient services to meet this unmet demand.


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