Delta Air Lines Records $940 Million Quarterly Loss But Says March Was Profitable

Delta Airlines said Wednesday it posted a loss of $940 million in the first three months of the year, as booming ticket sales were offset by higher fuel prices.

But the airline, which expected a loss this quarter, said its March operations were profitable and it was able to pass on some of the higher costs of fuel to customers.

The company reported adjusted operating income of $8.2 billion, down 21 percent from the same quarter in 2019, beating expectations it made at the beginning of the year. Delta said it expects revenue in the second quarter to decline from just 3 to 7 percent from the same period in 2019.

“With a strong rebound in demand as Omicron faded, we returned to profitability in March,” Delta CEO Ed Bastian said, adding that the company “succeeded in recovering higher fuel prices.”

Delta said strong spring break travel, reopening offices and lifting travel restrictions helped improve demand in the first few months of the year.

Domestic business travel recovered about 70 percent in March, compared to the same month in 2019. International business travel recovered nearly 50 percent. Delta also said revenue from premium seat sales on domestic flights has fully recovered to 2019 levels last month.

But rising jet fuel prices have slowed this momentum. Delta reported that it paid an average price of $2.79 per gallon of fuel, up 33 percent from the last quarter of last year. That price included savings of 7 cents a gallon thanks to the airline’s oil refinery outside of Philadelphia. The refinery also raised about $1.2 billion in revenue from third-party sales.

The airline said on Wednesday it expects the fuel price to rise to between $3.20 and $3.35 per gallon. It expects seat capacity to be restored in the second quarter by about 84 percent.

The industry started the year with widespread disruption to flights, as winter storms and staff shortages caused by the rapidly spreading Omicron variant of the coronavirus hampered its ability to handle the busy holiday season. In Delta, for example, about 8,000 employees — more than one in 10 — have recalled patients, the airline revealed in January. At the time, Mr Bastian estimated that the alternative had delayed the airline’s recovery by about 60 days.

Delta said in January it expected losses in that month and in February, with profitability returning in March. And while Delta expected to incur a loss during the first three months of this year, it forecast profits for the remainder of the year.

March started off strong, with several airlines reporting better-than-expected sales. But some of that improvement has been affected by higher fuel prices caused by the Russian invasion of Ukraine and supply chain problems. However, at an investor conference last month, American Airlines said it expects the additional revenue to offset the rise in fuel prices.

At the same conference, Glenn Haunstein, president of Delta, said the airline could “easily” raise fares in the second quarter to offset higher fuel costs, and recover costs faster than usual because customers book flights closer to travel date. At the time, he said, with an average one-way ticket price of about $200, the airline would need a refund of $15 to $20. One United Airlines executive was similarly optimistic that the airline would be able to pass on fuel costs to customers at higher prices.

The industry took a turn recently, according to an analysis by the Adobe Digital Economy Index. In February, for the first time since the pandemic began, sales of domestic flights exceeded those of the same month in 2019, according to the analysis. Adobe reported Tuesday that the trend continued last month, with prices up 20 percent from March 2019.

Over the past several weeks, about two million people were checked daily at TSA security checkpoints, or about 90 percent of the number of people screened during a similar period in 2019.

Delta was the first major US airline to report first-quarter performance. American and United plans to report earnings next week, and Southwest Airlines is expected to follow next week.

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