Delta Airlines tells travellers to plan for more expensive flights after USD2b fuel hit
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The news: Delta Airlines, the US’ largest carrier by market capitalisation, said it plans to cut routes and raise the price of tickets as it works to offset a USD2 billion ($2.83 billion) hit from an expected surge in fuel costs driven by the war in Iran.
The numbers: Delivering its March quarter earnings on Wednesday, the airline reported a first-quarter loss of USD289 million, or USD44 cents per share. Adjusted operating revenue came in ahead of forecasts, rising 9% to USD14.2 billion.
Delta said it plans to cut around 3.5% of its passenger capacity between April and June this year, with midweek routes and overnight journeys most likely to be axed. Of the USD2 billion hit it expects to incur from jet fuel price rises, Delta is hoping to claw back around 50% from the cost reductions.
The context: In an earnings conference calls, CEO Ed Bastian told analysts: “High fuel prices have been the most powerful catalyst for change, separating the winners and forcing weaker players to rationalise, consolidate or be eliminated,” having earlier told reporters that Delta is “looking to do more” fare increases beyond what has already been levied.
The airline is the first major US carrier to publish financials since the outbreak of the war in Iran and is being viewed as a bellwether for the country’s aviation market.
The sources: Delta Airlines, Bloomberg, WSJ, FT
