Delta Air Lines has reaffirmed its earnings guidance for the third quarter, covering the peak Summer and Labor Day travel periods, saying that it expects revenue growth of between 2% and 4% on the same period last year.
The latest guidance, which simply repeats an earnings outlook from July, ahead of an industry conference, is far more optimistic than what Delta was forecasting back in April.
At that point, the Atlanta-based carrier was forecasting revenue that would either be flat or up to 4%. Delta blamed plummeting travel demand, especially on domestic routes, for the uncertainty.
In its latest guidance, the airline said demand trends had improved, while improved operational performance and what it described as “industry supply rationalization” were helping it to save money.
Delta has never directly called out Trump’s tariffs as the reason for a drop in travel demand, although the airline started issuing warnings in April, explaining that demand plummeted shortly after the tariffs were announced.
Since then, however, Delta’s revenue has been boosted by high-spending premium customers who have the disposable income to travel in Business and First Class on long-haul flights.
Delta has also seen consumers booking more domestic flights, although, again, revenue is being driven by cash buyers of First Class seats.
Chief executive Ed Bastian previously said that he believed President Trump’s tariff policy was the “wrong approach.”
Along with strong performance from premium and international bookings, Delta is also being helped by its loyalty program and long-term relationship with American Express.
Now that Fall is upon us, the outlook for the remainder of the year may be a little more uncertain, and demand is trickier to estimate as booking behavior has changed over the course of this year.
Rather than booking flights in advance, many passengers, especially those who travel in the Main Cabin, are waiting much closer to the date of departure until they book their flights.
In order to extract as much money out of every ticket sold as possible, Delta has been experimenting with an AI-powered ticketing system, which will be used on up to 20% of all domestic fares sold by the end of this year.
Delta has faced criticism of this system, with some lawmakers mistakenly thinking that the software has the power to serve up individual prices based on a consumer’s spending power.
Bastian has sought to quell those fears, saying the system is based on market forces and nothing else.
In fact, airlines have used dynamic pricing for years, but Delta’s AI system is meant to make this process a lot faster and automated, quickly adjusting fares without human intervention.
