Delta Air Lines reported a "slow but steady" recovery in corporate travel, with a stronger rebound—as well as a return to overall profitability—on track for after the summer months.
As of March, corporate travel levels were about 20 per cent of what they were pre-pandemic, an improvement of five percentage points from where they were at the end of 2020, Delta president Glen Hauenstein said in an earnings call on Thursday. The carrier's most recent survey of its corporate customers showed that about a third planned to increase travel volumes in the second quarter, and the majority plan for employees to return to offices in the second half of the year, he said.
"We anticipate the significant increases [in corporate travel] will occur after Labor Day [6 September] as we enter the more traditional business travel season," Hauenstein said. "That will happen as vaccinations become even more widespread and offices continue to reopen."
Domestic leisure bookings, meanwhile, have recovered to 85 per cent of their 2019 levels, and the carrier expects leisure demand to continue to build in the coming months, particularly as Delta ends its policy of blocking middle seats next month. Pricing, however, is not recovering at the same pace, with domestic leisure yields down 15 per cent from 2019 levels and unlikely to improve until late in the summer, according to a research note by Cowen.
"Management forecasts 75 per cent load factor in May, followed by mid-80 per cent range in June," the note said. "At that point, they can yield manage again. A major opportunity will be when business and international traffic start returning in a major way."
Delta reported passenger revenues of US$2.7 billion in the first quarter, down 70 per cent from the first quarter of 2019, and total operating revenue was down 60 per cent from that quarter. The carrier expects total revenue in the second quarter to be down 50 per cent to 55 per cent compared with the second quarter of 2019, and scheduled capacity will be down about a third.
"If recovery trends hold, we expect positive cash generation for the June quarter and see a path to return to profitability in the September quarter as the demand recovery progresses," according to Delta CEO Ed Bastian.
Delta reported a net loss of US$1.2 billion for the first quarter.