As we know many airlines have struggled during the time of pandemic restrictions. However now that restrictions have been lifted or greatly reduced in many countries, airlines are starting to make a profit again. In Europe, we have seen how British Airways has moved back into the black. In North America, we have already seen how American Airlines has returned to profit. However, we are not out of the woods yet. In Europe, we have seen how airlines such as Tui and easyJet are still making losses (although even then their losses are less than before). With Delta Airlines however, we see the same story with the airline returning to profit in the same way as American Airlines as well as British Airways.
Delta Airlines’ Financial Performance
However, what is the story here? Well, it seems that Delta Airlines made a net loss of 940 million US dollars in its first quarter at the end of March this year. In its second quarter, however, up to the end of June of this year, the airline made a net profit of 735 million US dollars. As one can see this is a very steep improvement in a similar way to American Airlines which improved dramatically from a 1.6 billion US dollar loss to a 476 million US dollar profit.
The total operating revenue (total money received from services provided) was 13.824 billion dollars at the end of June this year when compared to 12.526 billion US dollars at the same time in pre-pandemic 2019. This suggests that in terms of sales Delta Airlines is doing better now than before. However, in terms of profit, the pre-Covid 2019 June figure was 1.443 billion US dollars which is almost double the profit made in June 2022. This suggests that there are greater expenses now when compared to pre-Covid times.
In its release, Dan Janki, the company’s Chief Financial Officer, explained that the problems the airline was experiencing were due to higher operating expenses due to lower capacity of planes. What this essentially means is that more planes are flying with fewer passengers. In addition, he has also commented on higher fuel prices (possibly due to the war in Ukraine), selling costs and investments in operational reliability. Selling costs may, for example, include commissions for sales agents. Investments in operational reliability may include investments in systems for plane maintenance.
Janki is however reassuring that costs will go down as the company returns to Delta’s pre-pandemic high standards. He aims to also improve the reliability of the service provided. Delta Airlines has also made efforts to reduce its debt burden by paying off 1 billion US dollars of debt.
Other Announcements From Delta Airlines
Other improvements announced include giving a pay rise to staff, improving policies and procedures to increase the reliability and efficiency of the service and strengthening its ties with American Express by launching a new credit card made with the metal from an old Boeing 747. Currently, its partnership with American Express, having already launched a co-branded card with the company, has brought in an extra 1.4 billion US dollars this quarter – a 35% improvement on pre-pandemic 2019. The partnership is tipped to bring in excess of 5 billion US dollars for the full year.
As one can see Delta Airlines is moving from strength to strength in terms of post-pandemic performance. It still has some way to go to reach its pre-pandemic level of profitability. It has ambitious plans to improve the service it offers. We have to wait to see how this progresses.