Ever since the pandemic hit in 2020, the airline industry has taken a huge blow. Travel halted and flights were canceled as lockdowns were imposed everywhere. The industry had to bear huge losses. But things started improving in late 2021 when lockdowns were lifted and traveling was allowed again in most places. With the summer approaching, airlines are hopeful demand will rise again for domestic and international travel, bringing in higher revenues and profits.
Delta Air Lines (DAL 1.43%) was the talk of the town after its most recent quarterly earnings earnings on April 13 and gave a hint of what the next quarter looks like for the company. Its stock jumped 10% last week, and most airline stocks soared following Delta’s earnings. Let’s take a look at why.
A good quarter for Delta amid the troubled times
Though the COVID-19 pandemic isn’t over, travel demand seems to be rising. People are more keen to travel, and even pay a little extra for their vacation plans to be successful, after being stuck at home for more than two years now. According to a Deloitte report, global intent to book an international flight climbed to 23% by June 2021.
For the quarter ended March, Delta reported operating revenue of $8.2 billion, which was 79% restored from the same period in 2019. The airline saw total domestic passenger revenue to be 83% recovered, while international passenger revenue recovered 54% versus the comparable quarter in 2019.
Offices also reopened, reviving both domestic corporate travel, which recovered 50% in the quarter, and international corporate travel, which recovered 35% versus 2019’s same quarter levels. The company recorded operating losses in January and February. But demand rose in March with a revenue recovery of 79%. It turned out to be a profitable month with an operating profit margin of 10%.
Hopeful for the future
Delta Air Lines also provided a very hopeful outlook for its next quarter….