Chicago — Delta Air Lines said on Thursday its bookings have stabilised, prompting it to forecast a brighter profit outlook for coming quarters, even as pricing pressures continue to weigh on industry margins.
Shares of the carrier jumped 13% in premarket trading after the airline said it expects industry-wide capacity discipline to support airfares. Peers United Airlines and American Airlines were also up over 8%.
Domestic rival Southwest Airlines rose 3.4%.
Like most US airlines, the Atlanta-based carrier pulled its full-year 2025 financial forecast in April as President Donald Trump’s trade war dented consumer and business confidence, hitting bookings.
Since then, industry executives say travel demand has stabilised. Passenger traffic in the US, however, is still down from a year ago, leading to a decline in airfares, government data shows.
Pressure
Delta’s second-quarter earnings report reinforced that view. The company said its bookings have stabilised and are now flat to last year. But its pricing power remains under pressure, particularly in the US domestic market.
Carriers plan to slash capacity after July to match the supply of airline seats with demand to prevent more discounting pressure.
Delta said the capacity rationalisation is expected to improve unit revenue, a proxy for pricing power, through the second half of the year.
The company is also leaning on cost-control measures to protect margins. It expects non-fuel operating costs to be flat-to-down in the third quarter from a year ago.
CEO Ed Bastian said the airline was focused on “managing the levers within our control to deliver strong earnings and cash flow.”
Delta forecast an adjusted profit of $1.25 to $1.75 a share for the quarter ending September. The midpoint of the forecast is $1.50 per share, compared with the analysts’ average estimate of $1.31, according to data compiled by LSEG.
For the full-year, the company expects adjusted earnings in the range of $5.25 a share to $6.25 a share. That compares with a profit of $5.39 per share expected by analysts.
Buffering
While a slump in travel demand has left all US carriers reeling, a diversified revenue stream, strong demand for premium travel and the growing value of customer loyalty programmes have helped Delta and rival United Airlines perform better.
For example, Delta’s premium ticket revenue was up 5% year-on-year in the second quarter even as its main-cabin ticket revenue declined from a year ago. Its loyalty revenue was up 8% year-on-year.
“Diverse revenues buffering company from weak main cabin demand,” TD Cowen’s Tom Fitzgerald wrote in a note.
“Delta’s guidance is encouraging for other full-service carriers, but we would hesitate on over-extrapolating the guidance for airlines without premium/diverse revenues.”
It reported an adjusted profit of $2.10 a share in the quarter through June, compared with analysts’ average estimate of $2.06 per share, according to LSEG data.
Reuters
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