Delta Air Lines Inc. DAL-N on Wednesday forecast upbeat revenue for the second quarter, betting on pent-up demand as travellers plan more trips undeterred by the higher prices of tickets, accommodation and rental cars.
“The demand out there continues despite all the concerns in the marketplace around the health of the consumer,” Delta Chief Executive Ed Bastian said at a conference.
The comments come at a time when consumer spending power has been sapped by soaring inflation and there have been fears of slowing global growth due to looming interest rate rises.
However, airlines have remained bullish with an eye on strong summer travel demand. “The recovery is exceeding my expectations,” Bastian added.
When asked at the conference about concerns related to a potential recession or a weaker demand environment, Bastian said “We’re not seeing evidence of that now.”
U.S. airlines have been buoyed by how quickly travel snapped back from the depths of the pandemic, leaving them struggling to add capacity in part due to staff shortages.
Staffing issues, weather-related problems and COVID-19 cases among employees caused airlines to cancel more than 2,500 flights over the Memorial Day holiday weekend.
The overwhelming demand has led U.S. airlines such as Southwest Airlines Co and JetBlue Corp Airways to give an upbeat revenue forecast for the current quarter.
Delta forecast second-quarter adjusted revenue between $12.4 billion and $12.5 billion. The Atlanta-based airline posted revenue of $12.4 billion in the June quarter of 2019.
The company also raised its operating margin outlook for the current quarter to 13%-14%, compared with its previous outlook of 12%-14%.
However, higher fuel prices stemming from the Ukraine conflict have caused Delta to raise its outlook for fuel price per gallon. The company now expects fuel price per gallon to be between $3.60 and $3.70, compared with its previous forecast of $3.20 to 3.35.
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