Delta Air offers bullish outlook on international travel demand

By Rajesh Kumar Singh

Delta Air Lines has predicted a higher profit than expected for the second quarter, pointing to “record” bookings for summer travel which includes strong demand for international trips. Despite lower earnings in Q1, Delta remained optimistic about consumer demand, especially in relation to international travel. The strong travel demand in the US has enabled carriers such as Delta Air to increase ticket prices offsetting rising labor and fuel bills. However, concerns have been raised that any slowdown in consumer spending on travel could negatively affect airline profits.

Delta Air’s revenue is expected to rise between 15-17% from last year’s figures on capacity growth of 17%. The company has stated that it has been able to protect its pricing power despite adding capacity. The airline expects an adjusted profit of $2.00 to $2.25 per share in the second quarter, with an operating margin of 14% to 16%, which is higher than the estimated $1.66 per share by analysts. Delta pilots have also ratified a new contract, which is expected to set pay increase and benefits benchmark for contract negotiations among rival carriers.

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