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Delta optimistic that pandemic is receding as travel demand — and fares — come roaring back

April 13, 2022
5 min read
Delta airlines airplanes are seen parked at Hartsfield-
Delta optimistic that pandemic is receding as travel demand — and fares — come roaring back
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Delta Air Lines is looking past the COVID-19 pandemic — and its first-quarter earnings show why.

Once the impact of the COVID-19 omicron variant receded in the U.S. in February, demand took off for the airline — big-time — leading to a blockbuster March. The quarter was "a tale of two halves," Delta President Glen Hauenstein said during the airline's quarterly earnings call with Wall Street analysts and reporters on Wednesday morning.

That month was the best cash sales month in the airline's history, beating the previous record from the spring of 2019 — despite offering 10% fewer seats, Delta CEO Ed Bastian said. In all, the airline beat Wall Street expectations, with an adjusted loss of $1.23 per share against analyst expectations of $1.30 per share.

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A big part of the Atlanta-based airline's March recovery was fueled by an increase in business travel, which has been much slower to return compared to leisure travel. That month, domestic corporate sales were 70% of 2019, while international corporate sales were 50% recovered.

"Domestic travel restrictions have been completely removed for all of our top corporate accounts," Hauenstein said.

The March momentum has continued into April, despite an uptick in COVID cases fueled by the omicron BA.2 subvariant, Hauenstein said.

Still, the existing momentum was cause for more optimism on the call.

"The one that we're really excited about right now is trans-Atlantic business, which for the first time last week crossed domestic restoration in terms of volume," he said.

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Domestic premium revenue was fully recovered in March compared to 2019 — so if you hold Delta Medallion status, good luck getting a complimentary upgrade.

Twice on the call, Bastian made it clear that he views the pandemic as receding.

"As COVID shifts from a pandemic to a manageable seasonal virus, there are clear signs of pent-up demand for travel and experiences as consumers' spending shifts from goods to services and experiences," he said.

Delta also said Wednesday that effective this month, unvaccinated employees would no longer have to pay a $200 per month insurance penalty.

"Any employee that hasn't been vaccinated will not be paying extra insurance costs going forward," Bastian said.

Delta — along with every other major U.S. airline — has called for the U.S. transportation mask mandate to be ended. News broke during the earnings call that the mandate, which was set to expire on Monday, would be extended until May 3.

But another pandemic era requirement could be on its way out.

Delta executives said they believe that the Centers for Disease Control and Prevention's pre-departure testing mandate, which has hampered some international demand, was on the verge of being lifted.

"We are getting a strong indication that the pre-departure testing will be phased out in the near future, which, of course, is quite encouraging," Chief Legal Officer Peter Carter said.

However, Delta's optimistic outlook about the state of the pandemic — and its second-quarter outlook — will offer little relief for consumers feeling stung by sky-high airfares. The airline said travelers continue to purchase expensive fares as seats — especially domestic ones — fill up faster than they did before the pandemic, thanks to pent-up demand.

More: CDC to extend mask mandate for another 2 weeks

"We haven't seen a lot of resistance to the price points that we have in market, and our goal is to have reasonable price points in market up to day of departure," Hauenstein said, noting that the company believes its customers are willing to pay more for a higher level of service compared to its competitors.

The airline also did not seem particularly concerned about the higher price of fuel, forecasting a 12% to 14% operating profit margin for the second quarter despite fuel prices rising 50% compared to the same period in 2019.

Delta has hired 14,000 workers since the start of 2021, though is still slightly smaller than it was before the pandemic. Travelers and investors shouldn't worry about staffing shortages at the airline, which have plagued competitors, Bastian said, because the airline's strategy is to focus on profitability rather than restoring capacity. Some airlines have been running an operation larger than they are able to manage with current staffing.

"We will remain nimble on capacity for the second half of the year and continue to prioritize sustained profitability," he said.

For the second quarter, the airline plans to have 84% of the capacity that was in place during the second quarter of 2019.

As has happened many times during the pandemic, the airline also acknowledged that the epidemiological and economic situation could change.

"Our crystal ball is only as good as the next 60 to 90 days," Hauenstein said.

Featured image by SOPA Images/LightRocket via Getty Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
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Annual Fee

$395

Recommended Credit

740-850
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Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

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The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

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  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
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  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
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  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023