Delta raises its revenue forecast for the second quarter amid a sharp rise in airfare

To hear this from Delta Air Lines, happy days are coming again, when travelers are happy to pay sharply higher fares just …

To hear this from Delta Air Lines, happy days are coming again when travelers are happy to pay much higher fares just to get on a plane and go somewhere this summer.

Delta said Wednesday that it expects second-quarter revenue to return to pre-pandemic 2019 levels, even with fewer flights. The airline said revenue per seat should be up 8 percentage points better than it originally expected.

However, the Atlanta-based airline is facing rising fuel prices. Other costs – primarily labor – are also rising. Delta expects fuel costs to rise to 22% above 2019 levels per seat, which is more serious than the mid-April forecast of 17%.

With mixed forecasts, Delta shares fell 5%, while shares of other airlines also fell more than the broader market.

In early summer, travelers pay more for any type of seat, from base to premium, Delta CEO Ed Bastian said during an investor conference.

“We expect prices to rise by an average of 25-30% this summer,” Bastian said. “We’ve never seen anything of this magnitude.”

It’s easy to find people on social media who complain about high fares, but airline executives scoff at the thought that current prices could scare away customers.

Speaking later at the same event for investors, United Airlines CEO Scott Kirby said tariffs had returned to where they were in 2014, after adjusting for inflation. In addition, according to him, the demand for travel was not affected by the price.

“If you’re worried about pricing that will destroy demand, you’re betting against history,” Kirby said.

Surprisingly strong rebound in air traffic this year has allowed airlines to raise fares higher, but also forced them to fight crowds with fewer workers than before the pandemic. Personnel problems contributed to mass cancellations and delays during the holiday of Remembrance Day.

Delta faced more than any other major U.S. airline, canceling more than 800 canceled flights in five days. The union representing the Delta pilots blamed the lack of staff.

Bastian said the Delta corps of 12,000 pilots is large enough, but it will take 8 to 12 months to train new and current staff to replace the 2,000 senior pilots who resigned or resigned during the pandemic.

The CEO said the airline – which last week cut its planned summer schedule to 3% – is giving more time between flights and adjusting the schedule at Atlanta airport to run more smoothly.

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