Delta Air Lines reaffirmed its full-year profit forecast and gave a stronger-than-expected third-quarter outlook, signaling confidence that recent fare gains can hold even as fuel prices ease from this year’s highs.
Fare Gains Hold
Delta’s results suggest airlines are driving revenue growth through pricing rather than capacity expansion. The airline reported revenue growth of nearly 14% in the second quarter on only about 1% capacity growth.
Passenger revenue per available seat mile — a measure of how much revenue Delta generates for each seat-mile of capacity — rose 11% in the second quarter from a year earlier.
Premium revenue rose 17% in the second quarter, but main-cabin ticket revenue also grew 8%, supporting Delta’s view that demand remains strong beyond its highest-paying customers.
Post-Summer Test
Analysts say the bigger test for airlines will come after the Labor Day holiday in September, when leisure travel typically softens. They warn that fourth-quarter capacity plans remain the biggest risk to current fare strength.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
