Delta Sees Demand Ticking Up Again After ‘Choppy' First Months
(Bloomberg) -- Delta Air Lines Inc. Chief Executive Officer Ed Bastian said he's more confident about demand in the second half of the year after price-sensitive passengers in the US showed restraint in recent months amid a worsening economic climate.
Demand should 'tick up a bit' in the period, Bastian said in an interview with Bloomberg Television in New Delhi on Sunday. That's after Delta suffered weakness in bookings predominantly in the US market and among leisure travelers in its main cabin earlier this year, he said.
'There's no question in the short term, with what we've seen coming out of Washington and the challenges of the trade negotiations, it's choppy at the moment,' Bastian said. 'I don't think that's going to be long lasting. We are pushing through and getting to a place of some stability.'
Bastian said that travel on the North Atlantic route is doing well, and while there's some weakness in the main coach cabin, yields in the front end of the aircraft remain strong. In March, Delta slashed its first-quarter profit guidance and reduced its outlook for revenue growth and operating margin, in a sharp reversal from the start of the year, when Bastian trumpeted a steady demand environment.
The company is due to report earnings in early July.
The aviation industry has been thrust into uncharted territory with the risk of tariffs, because airlines and manufacturers were long insulated from any levies given the global nature of the business. Delta has said that it doesn't want to absorb the cost of tariffs on aircraft that it's taking from Airbus SE, putting it on a possible collision course with the European manufacturer, which has also said it won't pay for the duties.
'We're very close partners with Airbus,' Bastian said. 'This time will pass, and there will be a new world order of some nature.'
More stories like this are available on bloomberg.com
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