CHICAGO — Delta Air Lines said on Thursday its bookings have stabilized, prompting it to forecast a brighter profit outlook for coming quarters, even as pricing pressures continue to weigh on industry margins.
Shares of the carrier rose 10 per cent in premarket trading after the airline said it expects industry-wide capacity discipline to support airfares. Peers United Airlines and American Airlines were also up over six per cent. Domestic rival Southwest Airlines rose three per cent.
Like most U.S. airlines, the Atlanta-based carrier pulled its full-year 2025 financial forecast in April as U.S. President Donald Trump’s trade war dented consumer and business confidence, hitting bookings.
Since then, industry executives say travel demand has stabilized. Passenger traffic in the U.S., however, is still down from a year ago, leading to a decline in airfares, government data shows.
Delta’s second-quarter earnings report reinforced that view. The company said its bookings have stabilized and are now flat to last year. But its pricing power remains under pressure, particularly in the U.S. domestic market.
Carriers plan to slash capacity after July to match the supply of airline seats with demand to prevent more discounting pressure.
Delta said the capacity rationalization is expected to improve unit revenue, a proxy for pricing power, through the second half of the year.
The company is also leaning on cost-control measures to protect margins. It expects non-fuel operating costs to be flat-to-down in the third quarter from a year ago.
CEO Ed Bastian said the airline was focused on “managing the levers within our control to deliver strong earnings and cash flow.”
Delta forecast an adjusted profit of US$1.25 to $1.75 a share for the quarter ending September. The midpoint of the forecast is $1.50 per share, compared with the analysts’ average estimate of $1.31, according to data compiled by LSEG.
For the full year, the company expects adjusted earnings in the range of $5.25 a share to $6.25 a share. That compares with a profit of $5.39 per share expected by analysts.
While a slump in travel demand has left all U.S. carriers reeling, a diversified revenue stream, strong demand for premium travel and the growing value of customer loyalty programs have helped Delta and rival United Airlines perform better.
For example, Delta’s premium ticket revenue was up five per cent year-on-year in the second quarter even as its main-cabin ticket revenue declined from a year ago. Its loyalty revenue was up eight per cent year-on-year.
It reported an adjusted profit of $2.10 a share in the quarter through June, compared with analysts’ average estimate of $2.06 per share, according to LSEG data.
(Reporting by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bengaluru; Editing by Matthew Lewis and Anil D’Silva)
